September 17th, 2018

Of all the steps you will take in life, few will be as profound or as impactful as the moment that you purchase a home. It is likely to be the largest purchase you make, and one that will not only impact your financial future but every day of your life that you spend living within that home. And while finding a great home isn't that difficult thanks to the many options on the market, what can be difficult is finding the right mortgage for your needs.
There are numerous things to consider, but three points are the most important. If you're ready to start shopping for your home, you'll need to know which loan option is the best for you. Here's a look at the three key things to consider.
Mortgage Type
You'll have two options here - conventional loans or those that are backed by the government. Conventional loan options are guaranteed by private lenders, while government-backed loans are insured by a branch of the US government. Government loan options include:
FHA Loans
These are designed for first time home buyers and those who struggle to qualify for traditional loans
VA Loans
Insured by the Department of Veterans Affairs, these are available to current military members and veterans
USDA Loans
These loans are focused on rural areas and those who meet various income level requirements
Each of these loans are backed by the US government and as such will often have lower down payment requirements, lower credit score requirements, and - in most cases - lower interest rates. Conventional loans are backed by private entities and as such are often harder to qualify for. However, they may be the only option if you don't qualify for government loan programs.
Interest Rates
Obviously, you want to secure the lowest possible interest rate when you secure a loan. But you also need to decide on a fixed or adjustable rate mortgage. Both have pros and cons to consider.
ARMs
Adjustable rates mortgage start off with much lower interest rates, then increase after a period of time. This means that monthly payments start low, but over the years could increase dramatically.
Fixed Rates
Fixed rate mortgages have interest rates that never change throughout the loan. They start with a slightly higher interest rate than an ARM will have, but won't change over time.
In general, the ARM is a better option for those who plan on selling their home in the future, while the fixed rate option is better for those who are planning on staying in their home for years to come.
Loan Size
Finally, you'll have to decide on the size of the loan. Conforming loans are capped at $453,100 in most locations. Going beyond the conforming limit means that you may end up with much higher interest rates and need a larger down payment in order to get the loan.
No matter the type of loan that you are looking for, contact a local mortgage expert today to get the right loan for your home purchase.