All the different financing options available for homebuyers can be confusing and overwhelming. With the right information, you can begin to understand loans and figure out the correct type for your situation. If you’re about to buy property in Irvine, look at these common types of home loans to see which one is right for you.
These are the most common types of loans, and many people like them because they are easy to understand. A fixed-rate loan offers the same interest rate for the entire loan, normally 15 or 30 years long, which means you pay the same amount each month. It is best to choose this loan if you are planning on staying in the home for quite a while.
The interest rates for these mortgages remain the same for a few years, then adjust once every year to meet current interest rates. At first, the interest is lower than a fixed-rate loan, so an adjustable rate mortgage is useful if you are planning to list a house for sale in Irvine before the end of the fixed-rate period. Adjustable rates can end up saving you money if mortgage rates drop, and they also offer better rates to those with lower credit scores.
A bridge loan is ideal for those who are buying a new home without waiting to sell their old property. As long as you have good credit, lenders may be able to offer you this type of temporary loan that is secured to your current property. The funds from the bridge loan can then be used as a down payment for your new home, and you only have to pay the single loan. This is convenient because it cuts down on the confusion of having multiple mortgages to manage. When you sell your old property, you pay off that home’s mortgage and then refinance your loan.
Federal Housing Administration (FHA)
If you do not have a lot saved up for your down payment, the FHA may be able to help. This type of loan is typically only offered to people who need less than $636,000, and interest rates are fixed along a 15 or 30-year term. You also need to be willing to pay for mortgage insurance. FHA loans may require a bit of extra paperwork, but they can be nice because the down payment may be as low as 3.5 percent.
Though these loans are only available to veterans who meet certain requirements, they offer great deals. Many veterans end up with a home without having to pay a down payment or purchase mortgage insurance. However, there are some limitations on the type of house you can get, and this type of loan will only be right for you if the home is your primary residence.
The type of property you purchase may affect your decision on the type of home you opt for. If you’re looking for houses, townhomes, or condos for sale in Irvine, reach out to the trusted agents at OC Residential. We can help you find the dream home you’re looking for and offer suggestions on the best plan of action for choosing a loan. Call 714-454-6304 today to speak with one of our friendly representatives.