If you haven’t bought a home in recent years, or if you’ve never had a mortgage, you may be surprised at the number of options available. A couple of decades ago there were basically three mortgage types available to a homebuyer: a fixed-rate conventional mortgage, an FHA loan or a VA loan. Not anymore.
In addition to those loans, there’s a plethora of new programs, each with features that are tailored to a certain type of buyer’s specific needs. We’ve put together this brief description of the types available so that you can get a feel for what’s out there. Please note, there will be some overlap in the types we’ve described. For instance, a jumbo loan will also be either a fixed-rate or adjustable-rate mortgage.
Having this many options may sound complex, and it could be if you had to figure it out on your own. But not to worry! Your Caliber Loan Consultant knows all about these different types of mortgages and will guide you to the one that’s is perfect for you and your particular situation.
Fixed-rate mortgages vs. adjustable-rate mortgages (ARMs)
All mortgages are based on either fixed-rate or adjustable-rate loans. Below we’ll use a standard conventional loan as our example for how these different rate structures apply, but please remember that these terms will also apply to other types of mortgages.
The most common mortgage is the conventional 30-year fixed-interest rate loan. It’s “the classic.” In the past 20 years, it’s represented 70% to 90% of all mortgages. (more…)