UNDERSTANDING YOUR LOAN OPTIONS:
FIXED-RATE LOANS
By Briana Frazier
A
s a homebuyer, you need to understand not all homes are the same. And knowing what kind of loan is most suitable for your situation prepares you for reaching out to lenders and landing the best mortgage loan. So, what loan options do you have? To make it clear, a loan option always contains three things: loan term, interest rate type, and loan type. Under the loan term, there is
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one for 15 years and the other one for 30 years. Why is loan term important? The loan term affects your interest rate, your monthly principal and interest payment, and how much you will be required to pay to clear the loan. Note, the longer the loan term, the more interest you’ll be required to pay. For the loan type, mortgage loans are categorized based on the size of the loan and whether
they are government backed or not. Under this, we have conventional loans, FHA loans, and Special program loans. Each loan type is designed for different situations and only a single loan type will fit suit your situation. Moving on to the interest rate type, we have the fixed-rate loans and the adjustable-rate mortgages. Let’s have a deeper dive on this.
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