| Before you buy a house you need to understand | | | | The two most common types of government |
| the different financing options that are available to | | | | loans are FHA (Federal Housing Authority) which |
| you. Home loans differ mainly in the interest rate | | | | are insured by the federal government, and VA |
| and the points charged. Loans can also vary | | | | (Veterans Administration), which are guaranteed. |
| depending on who offers the loans and how they | | | | FHA loans are attractive because they are |
| are backed. The two most common types of | | | | assumable(someone else can take over the |
| home loans are conventional and government | | | | payments). There are no penalties for prepaying |
| backed. You can get your loan from a banker or | | | | an FHA loan. |
| you can get a loan from a banker backed by | | | | Fixed Rate Mortgage Loans |
| Uncle Sam. Loans vary depending on how the | | | | On a fixed rate mortgage, your monthly payment |
| payments are structured. The two most common | | | | never varies. You pay the same amount for the |
| structures are fixed rate mortgages and | | | | first payment as you do for the last. If interest |
| adjustable-rate mortgages. Here I will tell you | | | | rates go up, it doesn't matter; your payment |
| about the different types of home loans you | | | | stays the same. Likewise if interest rates go |
| have available to you. | | | | down, your payments stay the same. |
| Conventional Loans | | | | Adjustable-Rate Mortgage Loans |
| Conventional loans are secured from a lender - | | | | When you get an ARM loan, you usually pay a |
| usually a bank, mortgage broker, or savings and | | | | lower rate initially than on a fixed-rate mortgage. |
| loan institution. Conventional loans usually require 3 | | | | The interest rate on the ARM loan is tied to an |
| to 20 percent for a down payment. You can put | | | | index that reflects the current money market. If |
| down less than 20 percent, but if you do, most | | | | the interest rates go up on your renewal date, |
| lenders will require that you purchase private | | | | your payments go up. If the interest rates go |
| mortgage insurance (PMI). This insurance increases | | | | down your payments go down. |
| the costs to you because you have to pay to | | | | I hope that this article has given you some useful |
| protect the lender in case you default on the loan. | | | | information that will help you in your search for a |
| Government-Backed Loans | | | | home loan. |