Renters are on the rise in America. 43.6 million in 2021. This, though, doesn’t mean that owning a home has lost its allure. Many Americans dream about homeownership.
If homeownership is the goal, why do more renters not want to live in a rental property? Renting is affordable, making it the go-to option for the many people who’re starting out in life. If you’d like to be a homeowner, though, there’s financial support available in the nature of home loans.
Are you in the market for a mortgage but don’t know how to choose the best one for you? We’re here to help.
For more information on choosing the best mortgage, continue reading.
Learn the Differences in Mortgage Types
This is a good place to start if you are looking for the best. mortgageTo be able to clearly see the types of mortgages on offer,
There are four main types of home loan:
- Conventional mortgage
- FHA loans – Guaranteed by the Federal Housing Administration
- USDA loans – Guaranteed by the U.S. Department of Agriculture
- VA loans – Guaranteed by the Department of Veteran Affairs
- Jumbo loans
Conventional mortgages, which account for around 45% of the total number of mortgages in existence, are most popular. 70 percent of all new mortgages. They can be offered only by private lenders.
Jumbo loans are conventional mortgages in all ways, only that they’re designed for people buying expensive homes.
FHA, USDA and VA loans are for specific populations.
Determine if your eligibility for a government-backed Mortgage
Government-backed mortgages have friendlier terms, such as lower interest rates and lower credit score threshold, so they’re preferable to conventional mortgages in most cases. However, they aren’t for everyone. You need to determine if you are eligible for one of these mortgages.
For instance, USDA home loans designed for people living in eligible rural areas – as defined by the Department. VA loans are available to veterans who have served in active duty and military personnel.
Evaluate Your Needs
Just because you’re eligible for a government-backed loan but doesn’t necessarily mean it’s the best mortgage for you.
For example, what if you’re a veteran who qualifies for a VA loan but the house you’re looking to buy costs a million dollars? VA loans don’t typically stretch to such an amount.
Your home’s needs will determine the type of mortgage that you choose. The right type of loan for you is a Jumbo Loan, as shown in the above example.
Personal finances play an equally important part. A minimum credit score requirement for conventional mortgages is 620. If your credit score falls below this level, you may not be approved for conventional mortgages.
FHA loans are available to those with a credit score below 580. However, there are additional requirements that must be met in order for them to be approved.
Get the Best Financial Support!
Buying a home is a massive step, especially when you’re getting it on financial support. It’s your responsibility to ensure you choose the best mortgage; otherwise, you could end up in financial distress. You now have all the info you need in order to select the right mortgage.
For more information on homeownership, visit our blog.