Before you set up an appointment at the bank, learn more about mortgage loan types. Use the mortgage calculator to see how much house you can afford.
Buying a Sarasota home is exciting, but the process of getting a mortgage loan can be intimidating. We want to help by providing you helpful information about different mortgage loan types. The mortgage calculator can help you determine how much home you can afford.
🤔 What is a home mortgage loan?
Most homebuyers don’t have enough cash on hand to purchase a home without help. Mortgage loans are secured through banks, credit unions, and other lenders. These loans cover the purchase price of the home and allow the homeowner to repay the loan (with interest) through monthly payments.
🏦 Conventional Mortgage Loans
A conventional mortgage loan requires a down payment and a credit score of at least 620. The down payment amount is a percentage of the sale price of the home. Keep in mind that the lender will look at your debt-to-income ratio. It’s important not to make big purchases with monthly payments if you’re thinking of buying a house.
Conventional loans must meet federally set lending limits set by Congress for residential properties in Florida counties. The Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) purchase loans from banks according to these limits.
If a mortgage loan meets the lending limits, it’s known as a conforming mortgage. Homebuyers who use these loans typically purchase single-family homes, investment properties, or vacation homes.
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🏙️ Government Insured Loans
Homeowners who may not qualify for a conventional mortgage loan may get some help from one of the three government agencies who offer assistance. You may get a loan insured through the U.S. Department of Veterans Affairs (VA Loan), Federal Housing Administration (FHA Loan), or the U.S. Department of Agriculture (USDA Loan).
Active U.S. military, veterans, and family members may qualify for a VA Loan. These mortgage loans have lower interest rates and no down payment. Most of the fees involved in the home buying process are included in the loan’s total.
USDA Loans help those with limited incomes who live in rural areas become homeowners. Homes must meet specific criteria and be located in certain areas before loans are given.
💰 Fixed-Rate Mortgages
A mortgage with a fixed-rate may be the best option for you if a predictable mortgage payment is necessary each month. These loans have interest rates that remain the same throughout the life of the loan.
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💵 Adjustable-Rate Mortgages
Adjustable-rate mortgage loans offer a fixed rate that is lower at the beginning of the mortgage but the interest rate resets to a variable interest that continues the remaining term of the mortgage. This type of mortgage loan comes with a monthly payment that can increase over time. Calculate the risks before choosing a loan with these terms.
🧮 Home Mortgage Calculator
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