28 Oct Which Type of Mortgage is Best?
There really is no “best” mortgage, but there is a “best for you” mortgage. Mortgage types vary depending on your particular situation. The type of mortgage you choose has a lot to do with your personal financial information, how much you can afford to put down on a down payment, and how quickly you can pay the loan back, among other factors. City Creek Mortgage is here to help you learn!
The most important thing to keep in mind is that the goal is to find a mortgage to help you purchase a home affordably. The way you choose to reach that goal has lots of variables.
You’ll find a professional team willing to work with you at City Creek Mortgage to achieve that goal! Our team wants you to have all the information you need to make the best decision regarding your finances and long-term goals. Knowledge is power!
The first step in homeownership is learning about the different types of available mortgages. We’re here to help you think through all your options and find the best mortgage for your circumstances.
Conventional Mortgage at City Creek Mortgage
Our goal is to help you find the mortgage that fits your wants and needs. As a general rule, the conventional mortgage is the most common choice for home buyers. Typically, conventional mortgages provide great rates, have different payment options, and offer flexible terms.
Sometimes, you’ll hear a conventional mortgage referred to as a “conforming loan” because they conform to standards set by Fannie Mae and Freddie Mac.
Like banks, credit unions, and mortgage companies, most lenders offer conforming mortgages and competitive rates. It’s essential to ask about the type of interest rate you’ll receive with your conventional mortgage.
Fixed-rate loans mean that you’ll have a fixed interest rate for the life of your loan. Adjustable-rate loans mean that your interest rate will be consistent for a specific amount of time; however, after a set amount of time, your interest rate will fluctuate based on market rates.
Pros to Conventional Mortgages:
- Some require down payments as low as 3%
- Available for lots of property types: primary residence, vacation homes, investment property
- Fixed and adjustable rates available
- Private mortgage insurance (PMI) can be canceled once you reach 20% equity
Cons to Conventional Mortgages:
- PMI is required if you put less than 20% down
- Lower credit scores can mean higher interest rates
- Small down payments can also mean higher interest rates
FHA Home Loans
FHA loans are a favorite among first-time homebuyers. Small down payment requirements, more lenient credit score standards, and more flexible income guidelines make these loans more accessible to a more significant percentage of buyers.
Backed by the Federal Housing Administration, these loans usually offer low-interest rates, too.
Pros to FHA Loans
- Down payment requirement is only around 3%
- Lower credit score doesn’t disqualify you
- Loan terms of 30 and 15 years are available
- One- to four-unit homes are allowed, and you can rent out additional units
Cons to FHA Loans
- Upfront and monthly mortgage insurance premiums are required
- Mortgage insurance isn’t cancellable
- Loan limits are typically lower
- Apply only to a primary residence
VA Home Loans from City Creek Mortgage
Only those with eligible military service history can qualify for this 100% (zero down payment) loan backed by the United States Department of Veterans Affairs.
These loans are considered the best loans on the market because they offer lower rates, and there is never monthly mortgage insurance required.
If you have any type of military history, you should consider this loan before any others.
Pros to VA Loans:
- Super-low mortgage rates
- No down payment
- No mortgage insurance
- Credit score leniency
Cons to VA Loans:
- There’s a minimum service history to qualify
- Home must be a primary residence only
- Often a funding fee is required that can sometimes range between 1.4%-3.6% of the total loan amount.
USDA Mortgages from City Creek Mortgage
These mortgages target low-income to moderate-income homebuyers who plan to live in rural areas. These plans make homeownership more affordable by eliminating any down payment. Also offered within this program are reduced interest rates and mortgage insurance costs.
Pros to USDA Loans
- No down payment
- Low mortgage insurance
- Below-market mortgage rates
- No loan limits
Cons to USDA Loans
- Home must be in a USDA-eligible rural area
- Household income limits must be met
- Fixed-rate, 30-year term is the only option available
About City Creek Mortgage
Even with all this information about the different types of mortgages available, you may still feel a little overwhelmed. That’s ok! City Creek Mortgage is here to help.
We aren’t your typical mortgage lender. At City Creek Mortgage, we listen. We help you consider all your options. Then, we work with you to find the best mortgage to fit your unique circumstances.
Our team wants you to be happy – not just with your new home, but with your mortgage payment as well. Our professionally trained team believes your financial health is important to your long-term physical health, so we prioritize your finances.