1. Fixed For Term of 30 Years
Pros:
- Lower monthly payments
- Predictability
- Afford more house
Cons:
- Pay more in total interest
- Slightly higher rates
- Could wind up over borrowing
Best for:
Homebuyers who plan to stay in a home for a long time and want lower monthly payments
2. 15-Year Fixed Interest Rate
Fixed for term of 15 years
Pros:
- Lower rates
- Less total interest paid
- Build equity faster
Cons:
- Higher monthly payments
- Ties up your money into your house
Best for:
Homebuyers who plan to stay in a home for a long time and who can afford the higher monthly payment
3. 5/1 and 7/1 adjustable-rate mortgage Interest rate
Fixed for the first 5 and 7 years, then can go up or down for remainder of loan term
Pros:
- Lower rates than fixed loans for initial years
- Lower monthly payments
Cons:
- Payments could become unaffordable when loan resets
- Might be difficult to sell or refinance later
Best for:
Home buyers who plan to live in a home for just a few years and want a lower monthly payment
4. FHA loan Interest rate
Fixed or adjustable (terms vary)
Pros:
- Low credit score requirement
- Minimum 3.5% down payment
Cons:
- Mandatory mortgage insurance that cannot be canceled
- Upfront and annual mortgage insurance premiums
Best for:
Lower-income borrowers or those with less-than-pristine credit and a small down payment
5. VA loan Interest rate
Fixed or adjustable (terms vary)
Pros:
- No down payment required
- Low interest rates
- No PMI
- No minimum credit score
Cons:
- Requires a funding fee
- Some lenders have overlays for credit score and other requirements
Best for:
Eligible military veterans or active-duty personnel and their spouses
6. Jumbo loan interest rate
Fixed or adjustable (terms vary)
Pros:
- Finance a home that exceeds conforming loan limits
- Competitive interest rates
Cons:
- Require higher down payments
- Need more cash reserves
- Harder to qualify for
Best for:
Homebuyers in expensive housing markets who cannot qualify for a conforming loan
Finding the right home loan is very important. Make sure you talk to several loan officers before deciding who you want to work with!