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Kurt Spoerle - Realtor®
Office: (317) 566-2399
Cell: (317) 366-4000
kurt@kurtspoerle.com
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What Type of Mortgage Do You Qualify For?

When it comes to home mortgages, there is no such thing as "one size fits all." There are many different circumstances that will effect what mortgage rate a buyer will qualify for. Luckily, there are several options to choose from, so with good financial standings you will be able to find a rate that works best for you. 

Here is a brief overview of the types of mortgages available today:

  • Adjustable-rate mortgages, or ARMs, are a type of mortgage in which the interest rate paid on the outstanding balance varies according to a specific benchmark. The initial interest rate is normally fixed for a period of time after which it is reset periodically, often every month. The interest rate paid by the borrower will be based on a benchmark plus an additional spread, called an ARM margin.

    An adjustable rate mortgage is also known as a "variable-rate mortgage" or a "floating-rate mortgage".

  • Fixed-rate mortgages A mortgage that has a fixed interest rate for the entire term of the loan. The distinguishing factor of a fixed-rate mortgage is that the interest rate over every time period of the mortgage is known at the time the mortgage is originated. The benefit of a fixed-rate mortgage is that the homeowner will not have to contend with varying loan payment amounts that fluctuate with interest rate movements.
  • Conventional mortgages are not guaranteed by the government. They are insured through private companies. The fees and additional costs associated with a conventional loan will vary depending on the mortgage lender.
  • Government loans, such as FHA and VA are guaranteed by government-sponsored insurance. An FHA loan is insured by the Federal Housing Administration (FHA).An FHA loan is a great option if you do not have a lot to put down at closing. It only requires 3.5% down payment. A VA loan offers long-term financing to eligible veterans or their surviving spouses. The intention of this loan is to offer veterans eligiblity for a loan where private financing is not available. It also allows veterans to purchase a home without a down payment.
  • Jumbo loans are often securitized by institutions other than Fannie Mae or Freddie Mac. These securities carry more credit risk than those issued by Fannie Mae or Freddie Mac, and therefore, trade at a yield premium which translates into slightly higher interest rates.

There are other specialty loans available to certain types of home buyers. Your lender will be able to go into more detail about those specialty loans. If you are thinking about purchasing a home, you should get pre-approved and not just pre-qualified. Getting pre-qualified is the first step but it is fairly simple. A lender can usually pre-qualify you over the phone by just getting your overall financial situation and there is usually no cost involved. Getting pre-approved is a more in depth process. You will provide your lender with necessary documentation for an extensive check on your financial background and credit check. This will allow the lender to determine a specific mortgage amount for which you are approved.

If you are interested in speaking with a lender and don't know who to call, we have several lenders that we work closely with and highly recommend. Give us a call and we would be happy to get you in touch with them!

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