What kinds of mortgages are available these days?

A. There are many different loan programs from which to choose and there is competition so you should contact at least three different lenders. Under the new mortgage lender rules issued by the Consumer Financial Protection Bureau (CFPB), it is actually very easy to shop and compare. The three basic loan programs are as follows:

Conventional: this type of loan in generally available from a bank, a mortgage broker, or a credit union. They can be a fixed rate loan or an adjustable rate loan (called an ARM). ARMs have a periodic interest adjustment, up or down. When interest rates are falling, an ARM can be a good deal. However, when interest rates are rising you are guaranteed to see the interest rate go up at the end of the first year. All lenders are now required to provide you with a written explanation of the way their particular ARM works.

VA Loans: This type of loan is only available to military veterans. They are guaranteed by the Veterans Administration and there are certain conditions which must be met if you want a VA loan.

FHA loans: This loan is insured by the Federal Housing Administration. FHA will guarantee the lender against a default by the borrower, but the borrower will have to pay an insurance premium for this coverage. Once again, there are conditions which must be met before such loans can be obtained.

These are the basics and creative lenders are always coming up with new programs in an effort to be competitive. However, not all these loans are in your best interest. You should shop around, and don’t accept the first loan that is offered. Remember that the life of the loan may be as long as 30 years – and that’s a long time to be stuck with an uncomfortable loan.

I’d be more than happy to discuss this further with you and answer any questions you may have. Just give me a call.


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