There are a lot of misconceptions when it comes to home loans in Troy Michigan. Thankfully, the experts with Gem Home Loans will make sure you know exactly what type of loan is right for you. We’ll be completely transparent and honest. We’ll go over the pros and cons of all our loan programs so you can make the most informed decision possible.
You’ve probably heard a lot about different kinds of loans. Some of the most common ones are fixed-rate loans, adjustable-rate loans, VA loans and FHA loans. Here’s a quick look at each one.
Fixed-Rate Loan
This is the most popular type of conventional loan. As the name implies, you pay the same interest rate for as long as the loan lasts.
If you plan on staying in your home for a long time and you like predictability, this could be a very good option. You’ll need to pay a down payment, so you’ll need to have a significant amount of money set aside. In some cases, that can be as much as 20 percent of the purchase price. But if you qualify, you won’t have to worry about fluctuating interest rates.
Adjustable-Rate Loan
Adjustable-rate loans typically offer lower mortgage payments for a certain amount of time – typically five or 10 years. After that period of time, however, interest rates will adjust at least once a year. If interest rates go up, your monthly mortgage payment will go up as well. But if they go down, your payments will go down.
This is a good option for someone who might not have a great credit score. The reason is it can be hard for them to get an affordable rate by going with a fixed-rate program. An adjustable-rate loan could make it easier for you to get a home. It’s also good for someone who doesn’t plan on living in that home very long. If you move before the rate goes up, you could save a great deal of money.
VA Loan
Many veterans find this is the best possible loan program for them. If you served in the U.S. military, a VA loan could be perfect. You will typically not have to worry about a down payment, and you usually don’t have to purchase mortgage insurance.
You have to have served at least 90 consecutive days during wartime, or 180 days during peacetime, to qualify. You will also qualify if you served at least six years in the Armed Forces reserves. There are some stringent requirements when it comes to a VA loan. Your home has to be your main residence, and it also has to meet certain minimum property standards. In other words, you won’t be able to buy a “fixer-upper.”
FHA Loan
FHA stands for the Federal Housing Administration. An FHA loan, like a VA loan, is backed by the U.S. government. In many cases, you can put down as little as 3.5 percent if you have a credit score of 580 or higher. If it’s lower, you’ll have to put down 10 percent.
FHA loans are great for those who can’t afford the 20 percent down payment often needed for conventional loans. However, you have to pay for mortgage insurance (usually about 1 percent of the loan amount), and the price of the home can’t go over a certain amount. That amount can vary, so talk to a professional with Gem Home Loans and we can give you the most updated information.
If you’d like more information on home loans in Troy, Michigan, get in touch with Gem Home Loans. Give us a call at (248) 780-1030 or contact us online.
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