What Loan Program is Best For Me?

The many different types of home loans available can seem overwhelming. Should you choose a fixed rate or adjustable rate? Should you choose a conventional loan or government loan? The truth is there is no right answer. Choosing a loan type is an important decision that is best made after you have researched your options. Remember, taking the time to explore your options now can mean saving thousands of dollars in the long run.

Ask yourself the following questions to determine what loan type is right for you:

Do you expect your financial situation to change over the next few years?
Do you plan to live in your current home for a long time?
Are you comfortable with the possibility of your mortgage payment changing over time?
Do you want to be free of mortgage debt by the time your children go to college or you retire?

A professional lender is the best resource available to help you decide which loan best fits your needs. To start, consider the following loan options based on how long you plan to stay in your home:

1-3 Years: Consider a 3/1 ARM or 1-year ARM, especially if you anticipate moving again soon. These options provide lower initial rates, which could benefit short-term homeownership.
3-5 Years: A 5/1 ARM offers a fixed rate for the first five years, then adjusts annually, suitable for slightly longer stays.
5-7 Years: A 7/1 ARM could be ideal, offering seven years of fixed payments before adjusting.
7-10 Years: For those considering a longer stay, a 10/1 ARM or a 30-year fixed mortgage could provide stability or flexibility as needed.
10+ Years: A 30-year fixed or 15-year fixed mortgage might be the best for long-term homeownership plans, providing predictable payments and faster equity building, respectively.

Additionally, explore these specialized loan options tailored to various needs and qualifications:

Conventional Loans: Ideal for borrowers with a strong credit history, offering competitive interest rates and various term lengths.
FHA Loans: Great for first-time homebuyers or those with lower credit scores. These loans offer lower down payments and are easier to qualify for.
VA Loans: An excellent option for veterans and active military members, providing favorable terms such as no down payment and no private mortgage insurance (PMI).
Non-QM Loans: For those with non-traditional income sources or higher risk tolerance, these loans provide flexibility but might come at higher interest rates.

Each of these loan types has its own benefits and considerations, so weighing your financial situation, homeownership goals, and possible future changes is key to selecting the right mortgage for you.