{"id":80,"date":"2021-03-13T20:15:21","date_gmt":"2021-03-13T20:15:21","guid":{"rendered":"https:\/\/readyretiree.com\/what-type-of-mortgage-is-best-for-each-type-of-buyer\/"},"modified":"2021-03-13T20:15:21","modified_gmt":"2021-03-13T20:15:21","slug":"what-type-of-mortgage-is-best-for-each-type-of-buyer","status":"publish","type":"post","link":"https:\/\/newmortgageguide.com\/index.php\/2021\/03\/13\/what-type-of-mortgage-is-best-for-each-type-of-buyer\/","title":{"rendered":"What Type of Mortgage is Best for Each Type of Buyer?"},"content":{"rendered":"\n
Mortgages are not a one-size-fits-all type of financial product. Depending on a borrower’s personal financial profile and what they are trying to accomplish short-term and long-term, one specific type of mortgage is likely more appropriate than another product at any point in time. Studying the pros and cons of each type of loan will help borrowers make an educated decision about which loan is best for them.<\/p>\n\n\n\n
Borrowers must select the most suitable mortgage by evaluating the variables that impact them the most. Below are the questions homebuyers should ask themselves before moving forward with a home loan product.<\/p>\n\n\n\n
Below are some different types of mortgages worthy of review.<\/p>\n\n\n\n
This type of loan is the go-to type of loan for many borrowers. These loans are backed by the federal agencies Freddie Mac and Fannie Mae which makes them plentiful, low-risk loans for banks. It is important to realize that conventional loans are either categorized as conforming or non-conforming loans.<\/p>\n\n\n\n
As the titles imply, conforming loans fall within strict guidelines and limit the amount of the loan amount. The reason this fact is important to a borrower is that it determines the interest rate charge.<\/p>\n\n\n\n
Conforming loans offer lower interest rates than non-conforming loans. The most popular non-conforming loan is a jumbo loan which is defined as a high-dollar loan for a specified amount which is determined by the locale. Jumbo loans typically start around a half-million dollars, plus or minus a few thousand depending on the area. The loan amount guidelines change regularly.<\/p>\n\n\n\n
This type of loan is perfect for risk-averse borrowers with a steady income who can prove steady employment, assets, creditworthiness, and income. Borrowers with 9 to 5 work profiles with at least two years of employment and good credit scores often apply for this type of mortgage loan.<\/p>\n\n\n\n
Advantages:<\/strong><\/p>\n\n\n\n 1. These loan products can be used for primary residence, vacation home, or investment properties. Disadvantages:<\/strong><\/p>\n\n\n\n 1. Borrowers must have a credit score of 620 or higher to qualify for this type of loan.
2. Borrower closing costs are usually reasonable as banks compete for mortgage customers.
3. In many cases, borrowers can get into this type of mortgage for as little as a three percent down payment.
4. PMI insurance can be canceled once you have 20 percent equity in your home.
5. Fixed-rate and adjustable-rate mortgage products are available.<\/p>\n\n\n\n
2. Borrowers can’t have more than a 45 to 50 percent debt ratio to qualify.
3. Borrowers who put down less than 20 percent on a home loan will have to pay for Private Mortgage Insurance (PMI).
4. Securing a conventional loan is a document-intensive exercise that requires borrowers to prove income, credit acceptability, assets, and stable employment history.<\/p>\n\n\n\n