Different Types of Home Loans

You've decided to take the plunge and you are ready to buy a home at the Lake of the Ozarks. Now all that's left to do is find the right home, get a mortgage loan, close on the sale, and move in... right?

 Well, more or less. Buying a home can be a little more complicated than that, but the process can run smoothly with the guidance of an experienced Lake of the Ozarks real estate agent and mortgage lender. Today, the team at Gattermeir Davidson Real Estate is here to help you gain some background information on the different types of home loans available and how to decide which one could be right for you.

Fixed Rate Mortgages

Fixed rate mortgages are exactly what their name implies: they have a fixed interest rate throughout the entire term (typically fifteen, twenty, or thirty years). The benefit to fixed rate mortgages is that you can trust the interest rate to remain consistent the whole time you are paying back your loan - your monthly payment will never increase. The drawback to fixed rate mortgages is that the interest rate may be slightly higher than those of other mortgages.

Adjustable Rate Mortgages

Adjustable rate mortgages (ARM) have a set interest rate for the first few years (generally three or five years), but then the rate will adjust to match the current market. The upside to ARM loans is that their initial interest rates are usually much lower than those of fixed rate mortgages. The downside to ARM loans is that after the initial period, the interest rate will typically rise and the monthly payment will go up.

Conventional Loans

Conventional loans, like their name suggests, are pretty much "by-the-book" mortgage loans. They typically require a 20% down payment, and borrowers will most likely have to pay for Private Mortgage Insurance (PMI) in addition to the principle and interest if they are unable to put 20% down upfront. Because they are backed by private lenders, they generally do not require as much paperwork as government-backed loans (see below). Conventional loans are available in both fixed-rate and adjustable-rate mortgages.

Government-Backed Loans

Our federal government wants to encourage our citizens to pursue the American Dream. In order to help make this dream a reality, the government offers three types of mortgage loans: FHA, VA, and USDA.

FHA Loans
The Federal Housing Association (FHA) offers home loans for both first-time and repeat buyers. Because these lenders are backed by the government if the borrowers default on the loan, they are usually less selective about their applicants than conventional lenders. The biggest advantage to FHA loans is that home buyers may be able to qualify for a down payment as low as 3.5%. The drawback to these loans is that borrowers will still be required to pay for PMI until they have paid back 20% of the principle.

VA Loans
VA loans are funded by the U.S. Department of Veteran Affairs and are only available to U.S. veterans, active-duty personnel, and (in some cases) their surviving spouses. The biggest appeal these loans offer is 100% financing - borrowers are able to take out a loan for the full amount of the home, without providing any money upfront. Not only that, but these loans do not require the traditional private mortgage insurance.


USDA Loans
USDA loans are backed by the U.S. Department of Agriculture, and are intended to help make homeownership possible for low-income families in rural areas. Buyers who do not qualify for conventional mortgage loans may be able to qualify for USDA loans. In order to qualify, the home the borrowers are purchasing must be in a county that has been zoned as "rural," and the buyers' combined household must not be higher than 115% of the adjusted area median income. Like VA loans, USDA loans also offer 100% financing. Your mortgage lender will be able to help you determine whether or not you meet these standards.

Happy House Hunting!

We hope that this helps you in your home buying process. If you are ready to tour some of the homes for sale at the Lake of the Ozarks, give us a call -- we would be happy to show you around!

 Stay connected with Gattermeir Davidson Real Estate, LLC!

2011 REALTOR Salesperson of the Year
Missouri Association of Realtors

Gattermeir Davidson Real Estate, LLC
752 Bagnell Dam Blvd., Suite A
Lake Ozark, MO 65049

Office | 573.365.1555
Fax | 573.365.1766
Location: Lake Ozark, MO 65049, USA

Comments

  1. UnknownJuly 10, 2018 at 2:15 AM


    Thank you for sharing such great information. It has help me in finding out more detail about housing loan emi

    ReplyDelete

Post a Comment

Popular posts from this blog

5 Home Buying Mistakes To Avoid

Image
Buying a home is a very exciting event, but it unfortunately comes with its fair share of pitfalls. Inexperienced home buyers may fall victim to common mistakes that can create added stress and frustration down the road. If you're getting ready to buy your first home at the Lake of the Ozarks , the team at Gattermeir Davidson Real Estate can help you avoid these pitfalls. Mistake #1: Not Getting Preapproved It's very common for first time home buyers to want to jump straight into touring different homes, before talking to a mortgage lender. When they do this, though, home buyers can get their hearts set on a certain property before they know for sure if they will be able to afford it. Do yourself (and your agent) a favor by getting preapproved for a home loan first so you will only visit homes you know you will be able to realistically consider buying. Mistake #2: Spending Beyond Your Means There can be a big difference between the size of loan you can qualify for and
Read more

Getting To Know Our Key Players: Conda Davidson

Image
Over the years, we've made great strides in becoming the  best real estate team at the Lake of the Ozarks . Along the way we've found success around every corner and have thrived immensely. That success didn't just come out of thin air though. eXp Realty wouldn't be where it is today without the hard work and dedication of our key players. So over the next few weeks we want to pay tribute to them by showcasing them. This week, we're honoring Condo Davidson, Owner/Broker Associate Lake of the Ozarks Realtor ®. You wouldn’t be able to tell at first glance, or even after first meeting her, but Conda Irene Davidson was born and raised in the small, rural town of Purdon, Missouri.  Purdon is where family values, contributing to the community and working hard are the three most important lessons of life. Some thirty years later, and long after Conda left her stomping grounds, she has kept the small town morals close to her heart and built her life and a business empire
Read more

15 Fun Facts About the Lake of the Ozarks

Image
The Lake of the Ozarks is renowned as the  best place to own a second home in the Midwest . People travel from miles around to soak up some sunshine, break out their fishing rods, get their shopping on, or relax on their  private waterfront docks at the Lake . Despite their love of this great destination, however, many people do not know very much about the Lake of the Ozarks. How was the Lake formed? When was the Lake created? That's why the  eXp Realty  team has put together a list of some of the top fun facts about the Lake of the Ozarks. Who's excited to learn more about this great destination?! 1. Bagnell Dam was completed in 1931, which officially formed the Lake of the Ozarks. 2. At its greatest depth, the Lake of the Ozarks is 130 feet deep. 3. The surface of the Lake covers approximately 61,000 square miles. 4. There are more than 1,150 miles of shoreline along the Lake of the Ozarks - more than the coast of California! 5. Of all people who  own two homes i
Read more