Here is a simple guide to help you understand the general types of mortgage loans available.
If you have any questions, contact your Brightland Mortgage mortgage loan originator.
This is your standard bread-and-butter mortgage. It’s the most popular type of mortgage out there, and for good reason. It’s simpler than many other loans, your interest rate stays the same, and you have an option between 30-year and 15-year terms.
If your credit score is lower, an FHA mortgage might just be the answer. Insured by the Federal Housing Administration, these loans are available to people with lower FICO scores and down payments as low as 3.5 percent.
FHA loans are especially popular among first-time buyers. In recent years, nearly half of first-time home buyers used an FHA loan.
The USDA’s Rural Development program helps low-to-moderate income home buyers in certain areas secure an affordable mortgage. Eligible home buyers can secure a mortgage with as little as $0 down.
While borrowers must have mortgage insurance, USDA loans feature relatively low interest rates, and the program is popular among first-time home buyers.
Backed by the Department of Veterans Affairs, these mortgages relax the restrictions of conventional mortgages for members of the armed forces, both current and former.
Eligible applicants can secure low-interest loans, often without a down payment, and closing costs are generally lower for VA loans.
Some mortgage loans are insured by the government.
VA LOANS: The VA guaranty helps to protect the lender (not the borrower) against loss if the borrower fails to repay the VA loan. Borrowers pay an upfront funding fee towards the VA guaranty. This guaranty enables a lender to provide loan options and benefits to military veterans and other qualified participants that may otherwise be unavailable through conventional financing.
FHA LOANS: FHA mortgage insurance protects the lender if a borrower defaults on the FHA loan. Each FHA borrower pays a mortgage insurance premium. The premiums are collected and used by the FHA to reimburse the lender (not the borrower) should the borrower default and the lender must foreclose upon the loan/sustain a loss. This insurance enables a lender to provide loan options and benefits often not available through conventional financing.