Types of Mortgage Products Overview
How does the new homebuyer know which mortgage is best? Start by learning the basic mortgage types, offered by MidCountry Bank.
When shopping for a mortgage, a little knowledge can save you a lot of money. There are several mortgage program options that may be right for you depending on where you buy, why you need the mortgage, and how much you plan to borrow.
Here's a convenient overview of some of the more popular mortgage loan programs available:
Roughly 30-50% of mortgages are conventional. This is typically what people think of first when they think of a mortgage. Conventional loans can be fixed-rate or adjustable-rate.
Adjustable rate mortgages are ideal for borrowers who expect rates to go down or those who prefer the flexibility of a shorter-term loan, or those who don’t plan on keeping a mortgage long term. The interest rate changes periodically according to an index that is selected when the mortgage is issued. This means that interest rates may rise during the loan term, leading to a higher payment than you originally planned.
An FHA loan is specifically designed to help: first-time homebuyers, people who don't have much money for a down payment, or may not qualify for a conventional loan. These federally insured loans make the process easier, since your down payment can be as low as 3.5% of the purchase price, and most of your closing costs and fees can be included in the mortgage. FHA is specifically for new or existing single-family homes, one- to four-family homes, a condominium unit, or a manufactured home on a permanent foundation. FHA loans may help many borrowers with lower down payments and easier qualification, but require a more detailed appraisal and may not work for all properties.
This loan is for veterans and military personnel. VA eligibility offers a 100% financing opportunity, and no requirement for mortgage insurance. Mortgage rates on VA loans are competitive with conventional loans, if not better. Veterans are not automatically eligible and must qualify for the VA mortgage program. VA loans may help many borrowers with lower down payments and easier qualification, but require a more detailed appraisal and may not work for all properties.
High loan amounts that require stricter qualifying requirements. Borrowers with stronger credit, lower debt-to-income ratios and a larger down payment may qualify.
A 203K is essentially a home improvement loan that is primarily used for rehabilitation or repair. It is an option for repairs ranging from $5,000 to $35,000 and is ideal for fixing up a foreclosed property. No out-of-pocket money is required to make the improvements, as the mortgage finances repair work from the start. This is a government program, so you must meet certain requirements to qualify. A MidCountry mortgage specialist can help you determine if this option is right for your project.
The United States Department of Agriculture (USDA) offers a Rural Development (RD) guaranteed mortgage at 100% loan-to-value, no down payment, and no mortgage insurance necessary. Since this program is location and income based, not every home or buyer will qualify for this loan. RD loans may help many borrowers with lower down payments and easier qualification, but require a more detailed appraisal and may not work for all properties. Contact MidCountry Bank to determine if an RD mortgage is right for your situation or the home you are considering.
Being well-acquainted with the mortgage types available to the new homebuyer is a first step to your ideal home financing.
Residential Construction Mortgages
Building a home has a lot of moving parts and you want to focus on the look and feel of your house knowing that you have a partner that “has your back” managing the necessary details. A construction loan from MidCountry Mortgage provides interest-only financing solutions so you can count on having the funds you need at just the right time during the building process. We want to make new home construction a memorable and rewarding experience for you.
Complete Homebuyer's Mortgage Guide
Minimum and Maximum loan amounts apply. Rates and programs subject to change at any time. Loans subject to borrower qualifications, property evaluation and credit approval. All rates and program guidelines subject to change without notice based on consumer eligibility and marketing conditions. All loans subject to credit approval and compliance with underwriting standards.