Your 2016 Mortgage Loan Guide

Mortgage in San DiegoAre you a homebuyer looking for the perfect mortgage loan? You may have shopped for rates and loans for a while now, but you may also be confused with all the different mortgage loans available out there.

To clarify, here is a guide from Mortgage San Diego on the mortgage loans you can get today.

Same Monthly Interest

Now, the first two kinds of mortgage loans are fixed rate and adjustable rate. Fixed-rate mortgages are self-explanatory: your interest rate is fixed for the entire duration of the loan. Your payments are separated into equal amounts for each month.

Annual Adjusting Rate

Adjustable rate mortgages, or ARM, on the other hand, have rates that adjust or change annually for the entire duration of the loan. There is such a thing as a hybrid ARM, however. Hybrid ARMs are fixed-rate for a certain amount of years before changing into an adjustable annual rate.

Regular Loans

Now, besides fixed rate and adjustable rate loans, you can also choose between conventional and government-insured loans. Conventional mortgages are basically uninsured by the federal government. The terms and conditions which underlie conventional mortgages are set by Fannie Mae (Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Corporation).

Protection by the Government

Opposite conventional loans are government-insured loans which come in three sub-types: FHA (Federal Housing Administration) loans, VA (U.S. Department of Veterans Affairs) loans, and USDA (United States Department of Agriculture) loans. Briefly, FHA loans are for all kinds of borrowers. VA loans, which you can get here in San Diego, are for military service members and their families. Finally, USDA loans are for rural borrowers who have steady, modest, or low income who cannot acquire housing via conventional financing.

Size-Dependent Loans

The final distinction is between jumbo and conforming loans. These loans depend on the size of the loan. Conforming loans meet the maximum size limits established by Fannie Mae and Freddie Mac. Jumbo loans, on the other hand, exceed those limits and therefore higher risk.

Learning these distinctions between mortgage loans will make you a smarter mortgage shopper. You can then choose the right mortgage for you!

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