Smarter in 60 - What Type of Mortgage is Best for Me?

Smarter in 60 Mortgage Tips

There are many types of mortgages available to homebuyers, and one of the most common questions mortgage lenders receive is, “Which mortgage is right for us?” A knowledgeable lender will first asses the homebuyer’s financial situation before providing an answer. The most suitable mortgage option depends on factors such as income, credit history, and long-term financial goals. Once the lender has a clear understanding of these details, they can determine whether a fixed-rate mortgage, an adjustable-rate mortgage, or a government-backed loan is the best fit.

Here’s more information on each type of mortgage:

Fixed-rate mortgage

You’ll lock into one interest rate for the duration of the loan. The longer the term of the loan, the less you’ll pay monthly, but you’ll pay more in long-term interest charges. Fixed-rate mortgages are great for people who have a good credit rating and can afford a decent down payment.

Adjustable-rate mortgage

You typically start with a low interest rate, but the rate is reviewable after a set period of time. At that point, the interest rate could go up or down based on economic conditions. An annual cap on the interest rate will help protect you from large rate increases.

WHEDA Advantage mortgage

For Wisconsin home buyers, this mortgage backed by the Wisconsin Housing and Economic Development Authority features down payment assistance and other advantages that help Wisconsin residents who have modest means buy their own home.

Guaranteed Rural Housing

Backed by the federal government, these loans are for people who live in rural areas and communities under 10,000 in population. They don’t require a down payment, making them a bit more affordable for someone who has modest financial means.

FHA and VA mortgages

Federal Housing Administration and Veterans Administration loans are backed by the federal government and designed to help borrowers who either don’t have great credit history (FHA) or those who served in the military (VA). They offer low down payments, but you must meet their requirements to obtain this type of loan.

When it comes to mortgages, there are many options to review.  Every homebuyer has a unique set of circumstances that the mortgage lender should consider when providing the best loan possible.

Our Peoples mortgage lenders can help you determine what type of mortgage might be best for your financial situation. You can apply online by selecting a lender or calling 888.929.9902 and asking to speak to a mortgage lender.