3 Steps to Choosing the Best Mortgage Loan
If you’re thinking of buying a home, choosing the right type of mortgage loan is vital. There are quite a few different options out there, and Clark County Credit Union can help you find the one that’s right for you.
How to Choose the Right Mortgage Loan
Step 1: Sit down and take a look at your income, debts, monthly expenses, and credit score. Once you determine a monthly mortgage loan payment you can afford, it will be easier to make an informed decision about the terms and type of mortgage that will work for you.
Step 2: Do some research and get information about your options for mortgage loans. There are two main types of mortgages available, conventional mortgage loans that are guaranteed by private lenders, credit unions or banking institutions; and government-backed mortgages, which include FHA, VA and USDA loans. It’s also important to understand the differences between fixed or adjustable interest rates.
Step 3: Weigh your options by comparing the different types of loans:
- FHA loans are insured by the Federal Housing Administration and typically make home buying more affordable. If you’re a first-time buyer, you may be eligible for a down payment as low as 3.5 percent.
- VA loans are available to current military service members and veterans only. This type of mortgage loan is insured by the Department of Veterans Affairs and provides low or no down payment options and competitive mortgage rates.
- USDA loans are typically geared toward rural buyers who meet specific income requirements. They’re backed by the U.S. Department of Agriculture and offer a zero down payment mortgage for eligible rural and suburban homebuyers. Qualifying income limits vary by location and household size. USDA mortgage loans can only be used to fund owner-occupied primary residences.
- Conventional loans are offered by credit unions, banks, private lenders, or savings institutions. They require a larger down payment than government-backed loans, which can vary depending on your credit history and the type of lender you choose. Conventional loans can have terms of 10, 15, 20, or 30 years.
It’s important to be mindful of the fact that if you’re putting less than 20 percent down on a conventional or government-backed loan, you’ll have to pay for private mortgage insurance. Saving for a larger down payment, building your credit score and lowering your debt-to-income ratio can help you qualify for a conventional loan and eliminate some of the extra fees and higher interest rates that can come with government-backed loans.
Contact a Credit Union to Learn More
To find out more about which type of mortgage loan will best fit your finances and lifestyle, contact Clark Country Credit Union at 702-228-2228. In addition to traditional and government-backed mortgages, we offer 2ndchance mortgages, land and home construction loans and business and commercial loan options. We’ll help you save and get the lowest possible interest rate, regardless of the type of mortgage loan you choose.