Types of Home Loan That You Need to Know

Home loan are something very important to be well considered by anyone who wants to purchase a property. It is because home loan is a kind of loan that will be your responsibility. There are many considerations when taking the loan but the three most important considerations is the type of the loan, the size of the loan, and the duration of the loan. Because the loan is a big deal, you need to know everything about mortgage before attempting to get one. Below is the information about some types of the most common home loan.

1.     Fixed-Rate Home Loan
The most common type is the fixed-rate. With this kind of loan, the interest that you pay every month is going to be exactly the same during the duration of the loan. With this kind of loan, you will also get easiness in the payment because this loan’s payment is monthly and the method of the calculation is simply all the amount of your loan divided into the same monthly payment according to the life or the duration of the loan. Then, it can be said that the loan can be amortize over the duration of the loan. The most common duration of this kind of loan is 15 years for short term loan and 30 years for long term. The 30-year fixed rate loan is the most preferable loan across the nation because in 30-year fixed rate loan or long term mortgage the payment will be lowers.

2.     Jumbo Home Loan
This kind of loan is an alternative for a lot of people who do not want to take regular fixed-rate loan. Usually, a jumbo loan has long term payment such as 30 years and obviously has higher interest rates. It is because the loan amount of this kind of loan is above the regular fixed-rate loan conforming limits. To get a jumbo loan, you will be asked to get it from a finance company that is not backed by the government directly. Normally, people are trying to get this kind of loan because they cannot get the insecurity from the other types of loans. It can be caused by terrible credit problem or many other restrictions in financial for that person. This kind of loan can provide you with much higher amounts of loan. Compared to a normal loan, this is quite full with advantages. In normal loan, the loan will limit the loan, loan rates, and the interest. In jumbo loan, it is kind of limitless.

3.     FHA Home Loan
FHA (Federal Housing Administration) home loan can be defined as a loan to purchase property powered by the government. It has more flexible requirements of lending the money than many other loan providers. That is why the interest rates included in FHA loanis usually higher than the other kinds of loan. Beside of that, the potential loaners have to pay the insurance premiums for monthly loan at the same time with their regular monthly home loan payments.