So you’re ready to purchase your forever home, vacation home or rental property. Now is the time to lock in an affordable rate and complete an application. Once approved you’ll be enjoying the comfort of your new space in the blink of an eye. As you know, the homebuying process can be complicated. That’s why we are here to help analyze all of the home loan options available to you in the Houston area.
Choosing Between an Adjustable Rate or Fixed Mortgage
One of your first options as a borrower is to choose between a fixed mortgage or an adjustable rate. You’ll find that most home loan options available fall into either of these categories or are a combination of both. What is the difference between the two?
With a fixed rate mortgage you can expect your payments to remain the same throughout the entire loan term. Yes, monthly principle and interest payments won’t go up or down, even if you’ve opted for a long-term financing term such as a thirty year fixed mortgage. You’ll also never have to worry about the interest rate changing.
Adjustable Rate Mortgage
An adjustable rate mortgage also commonly referred to as ARM is a home loan that periodically changes. Usually, the monthly payments on an ARM can go up or down. This typically happens on an annual basis after a period where initial payments remain at a fixed rate. Adjustable rate mortgages can be considered a hybrid loan product since they begin at a fixed rate and then later on switch to an adjustable rate.
Government Mortgage Programs Versus A Conventional Loan
Besides a fixed rate or adjustable rate mortgage you have additional options. You can choose between a government insured home loan or a conventional loan.
The most popular type of government home loan is known as an FHA loan. The Federal Housing Administration Loan program is run by the Federal government. The great feature of FHA loans is it allows buyers to put down as little as 3.5% on a loan. This mortgage program protects lenders against buyer default on their payments. However, if you decide to take out an FHA loan, mortgage insurance will be added to your monthly payments, regardless of the amount of the down payment or the loan.
At Liberty Mortgage, even conventional loans are offered for credit scores as low as 620, a streamlined underwriting process and low down payment options, even lower than FHA requirements. While FHA loans allow higher debt to income ratios, conventional loans offer lower PMI options and fast turn times. Let Liberty Mortgage show you how lending was meant to be!
Buying a home in the Houston area has become a little bit easier, thanks to Liberty Mortgage. Let us be your one-stop mortgage advisor including valuable information on the best mortgage options for you. Contact us to be one step closer to buying the home of your dreams.