What’s The Best Mortgage Loan For Buying a House?

December 1, 2021
Last updated:
April 6, 2022
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Making a home purchase can be streamlined and stress-free when you choose the right or rather best loan for you and your financial situation. Thus, in this article, we’ll go over the top loans for buying a house and help you decide what loan options make the most sense for you.

The best mortgage loan for buying a home is the one that can get you into your new home with the least amount of hassle. The right loan will also fit in your budget, have affordable monthly mortgage payments, and allow you to move at the pace you need to without being bogged down by any costly penalties.

If you are currently considering a home or residential real estate purchase, then it is important to know what mortgage loans are available. In general, there are many financing options that can be combined with a down payment and an average or minimum credit score to help buyers get the perfect loan for their needs. But how do you know which one is right for you?

What Are The Top Loans For A Homebuyer?

As you are likely aware, there is no one-size-fits-all answer because everyone has different needs – from the size of the loan they need to their income situation. Nevertheless, for most homebuyers, there are a couple of loan types that stand out and can ultimately help them to achieve their financing goals and buy a home.

The first loan is the government-backed FHA loan, which is one of the most popular loans today. This type of loan has many benefits, including low down payments, favorable interest rates, and reduced closing costs. Other common mortgage types include fixed-rate mortgages (same interest rate over the life of the loan, which can be something to consider if you are looking to save money over time by paying off your mortgage early), other government-backed loans (VA and USDA), and jumbo loans for buyers that need more funds to buy a house than the federal limit or a standard mortgage allows.

Conventional mortgages are home loans that are not insured by the federal government. There are two types of conventional loans: conforming and non-conforming loans. Conventional loans are typically ideal for borrowers with strong credit or an above-average credit score, a stable income and employment history, and a bigger down payment. Note that most mortgage lenders also look at your debt to income ratio here to ensure that you can meet your monthly mortgage payments.

Which Loan Type Is The Best Mortgage Loan For Buying A House?

Clearly, there are more than a few home loan options/mortgage products to choose from when it comes to buying a home. That said, determining the best loan for the job really depends on you and your financial situation. Getting a mortgage preapproval letter from a handful of mortgage lenders is a must. This gives you an idea of what you can afford and which loan type might work best for you.

After getting your mortgage preapproval letter, the next step in the mortgage process is to determine what loan type to choose and what your monthly mortgage payment may be. If you can afford a decent mortgage payment every month, but haven’t been able to save up much for a down payment, an FHA (federal housing administration) loan is likely a good fit. FHA loans are insured by the FHA (federal housing administration) and you can get away with a much lower down payment than the traditional 20%.

If you have served or are serving in the military, then taking advantage of a VA loan is an excellent alternative to a conventional loan. VA loans come with a host of benefits for veterans, including favorable credit score requirements, a low or no down payment, an affordable mortgage payment, possible waived mortgage insurance, decent mortgage rates, and more.

Maybe you are interested in a home in a rural area. If so, you may want to see if you qualify for a USDA loan. This can let you buy your dream home easily in an area where growth is desired and homes are staying vacant.

The point here is that what is best for one buyer and home purchase might not be the same for the next. It’s is important to do your homework when you get a mortgage. You should still make it a point to shop multiple mortgage lenders, as well as work with a local mortgage professional and real estate agents that understand your particular situation.

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Are There Mortgage Loan Programs Specifically Designed For First-Time Buyers?

If this is your first time considering a home purchase, there is no need to panic. There are plenty of mortgage loan programs and options specifically designed for first-time home buyers. Fannie Mae and Freddie Mac also offer guidance for first-time home purchases (housing and urban development counselors, housing market tips, and more). All of these programs share the goal of making homeownership possible for those who are new to the real estate buying process or who simply do not have a lot of experience buying homes.

How Do You Choose The Right Mortgage For Your Needs?

Ultimately, many types of mortgage loans exist—conventional loans, FHA loans, VA loans, fixed-rate mortgages, adjustable-rate mortgages, jumbo loans, and more. Each mortgage loan may require certain down payments or specify standards for the loan amount/purchase price, mortgage insurance, and interest.

It is in your best interest to learn about all your home buying options as well as check out the above-mentioned common loan types to see if you qualify for any home loan or first-time home buyer programs in particular. This will help you determine which loan type or program for first-time homebuyers is best suited for you, so you can get a mortgage and make your dreams of homeownership a reality.

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Thinking About Buying A House?

Are you about to embark on the homebuying process? Or do you need additional assistance to find the best mortgage loan and qualify for a mortgage? If so, Sammamish Mortgage can help. We are a local online mortgage company from Bellevue, Washington, serving the entire state, as well as Oregon, Idaho, and Colorado. We offer many mortgage programs, mortgage products, housing market insight, and more to buyers all over the Pacific Northwest and have been doing so since 1992. Contact us today with any questions you have about mortgages.

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