Your Options When Financing a Home Purchase
Dressed in your best power outfit, you stride with purpose into the lobby of the neighborhood bank. Hard work and smart spending has provided you with a down payment. No longer will you pay to create equity in someone else’s investment. The front lawn of your dream home is now decorated with a For Sale sign. Other people are jealous of your credit score. You are determined to get a mortgage.
Showing no sign of fear, you ask to speak to someone about a home loan. In the back of your mind you have an idea about mortgages. A downpayment is made, house payments are made, and in 30 years you own it free and clear.
Your vision of a mortgage is the Conventional Loan. However, there are many other options to consider before signing the paperwork. Before committing 30 years of your finances you should explore all the mortgage possibilities available.
Types of Home Loans
Private Loans
A privately backed mortgage, or conventional loan, is the most common type of financing. A conventional loan has a set term with the loan paid in full at the end of the term. As private loans are not backed by the federal government they carry more risk than government-backed counterparts. For this reason most lenders encourage a 20% down payment. If you have not saved up 20%…
