The first thing which comes to mind when planning to buy a property is; which type of loan should I avail? There are several options available and choosing the right one according to your requirements can sometimes get tricky. Moreover, the mortgage rates also depend on the type of loan you have availed. So if you are looking for homes for sale in Mason Ohio and want to take a mortgage then read on as we explain the types of loans that are available for you.
Conventional Mortgage
This is one of the most common types of home loans and typically has the best rates. If you are looking homes for sale in Mason Ohio or homes for sale in Springboro Ohio you need to have a good credit. These loans can be for 15 or 30 years or the other option is “interest-only” where you do not pay any principal amount in the payment. In interest-only loans the payment you make is on a bit lower side, however, you do not pay off the actual loan amount in your EMI.
In a 30-year loan, the rate of interest is fixed for the entire life of the loan. The payments are steady and predictable. Private Mortgage Insurance or PMI is usually required if the down payment is less than 20%. In case you are looking houses for sale in Springboro Ohio or homes for sale in Mason Ohio and are planning to settle down in these cities for good than this loan is just apt for you since the rate is fixed and the monthly payments are also on a lower side as compared to a 15 year fixed loan.
Similarly, in a 15-year loan, the interest rates are fixed for the entire lifespan of the loan. Additionally, the interest rates and interest paid is lower as compared to a 30-year loan. Again the PMI is usually required if the down payment amount is less than 20%. This type of loan is ideal for those buyers who wish to pay off their loans faster and with less amount of interest component.
FHA- Federal Housing Authority
FHA loans are eligible for buying a new property, home repairs or even refinancing and are insured by HUD. The interest rate can be flexible or fixed as per the requirement. Furthermore, this type of loan requires a down payment of 3.5% only and doesn’t have rigid credit score requirements. However, in FHA monthly and upfront MIP (mortgage insurance premium) is required. This type of loan is suitable for those who cannot give high down payment or do not have a good credit score.
ARM – Adjustable Rate Mortgage
These loans begin at a lower rate than the current rate, but can change after one or more years and the change is usually upwards. These are also available in two forms –
5/1ARM – The rate is fixed for 5 years and then may change every subsequent year. Although the rate of interest is low, however, it is for a set period of time. Again, PMI required if down payment is <20%. So if you are looking for houses for sale in Mason Ohio but plan to sell within 5 years than this type of loan is apt for you.
7/1 ARM- Similar to 5/1, the interest rate is fixed for 7 years and then changes every year. Again the lower rate of interest is only for a set period of time. PMI is required if down payment is <20%. This type of loan is ideal for those who are comfortable with changing rates and are planning to sell before 7 years.
VA
This type of loan can be fixed or adjustable. Moreover, the interest rates are competitive. Also, in most of the cases, the down payment is nil and no PMI is required. However, VA funding fee is needed. This type of loan is ideal for eligible veterans mainly military personnel.
Jumbo Loan
The rate of interest can be fixed or adjustable. The down payment is the loan amount that exceeds the conforming loan limits. Additionally, the PMI requirements depend on the lender. Such loans are ideal if you are looking for homes for sale in Mason Ohio where the price exceeds $453,100 or more.
Plan well and book your dream home today!
