At Mid America Mortgage, we offer a wide range of mortgage loans. We’ll make sure to always walk you through each option to find the best type of loan for your situation. If you’re just starting to look into the mortgage process, it can be a bit overwhelming and maybe confusing. So, we’ve put together this mortgage comparison as a guide to help understand what types of loans are available.
What Types Of Mortgages Are Available?
There are different kinds of mortgages which fit different types of financing needs. Mortgage loans can be categorized several different ways.
Fixed-Rate Vs. Adjustable-Rate Loans
Generally, loans can fall into two categories, fixed-rate and adjustable rate mortgages (ARM). Within those categories, loans are also issued for a specific term, or number of years. Your monthly payments are structured so that you can pay off your loan within that time period.
Government Vs. Conventional Loans
Unlike conventional loans, government secured loans are backed by a federal agency, like the Federal Housing Administration or U.S. Dept. of Veterans Affairs. These loans are insured by the government to protect the lender in case of default. They generally offer lower interest rates and down payment requirements. However, they do have specific eligibility requirements. For example, VA loans are only available to Veterans, and FHA loans have loan amount restrictions based on county of residence; you typically don’t see these restrictions with conventional loans.
Conforming Vs. Jumbo Loans
Conventional mortgages are classified as conforming when the loan amount is less than or equal to $510,400 (single unit residential). Loans greater than this amount are considered jumbo loans. Jumbo loans often come with higher interest rates, larger down payment requirements and more stringent qualifying guidelines.
Loans With Or Without Mortgage Insurance
If you make a down payment of less than 20 percent of your home’s purchase price, most lenders will require you to pay some type of mortgage insurance (MI) premium. Costs may vary based on the type of loan, your credit profile and the actual down payment amount. MI is usually calculated as a percentage of the total loan amount and is typically added directly to your monthly loan payment. However, certain programs allow you to finance MI into the loan, paying a one-time upfront payment or accepting a higher interest rate in lieu of monthly payments. Depending on the type of loan, MI payments may continue for the life of the loan or last for a specified duration.
How We Can Help
No matter what type of loan you need, we will make sure to provide the best service possible throughout the process. Contact Mid America Mortgage today to see how we can help!