If you’ve set your mind on buying a house, it will likely be the biggest investment you’ll make in your whole lifetime. However, the bad news is that real estate costs have been spiking since last year. They’ve climbed up by a whopping 15%, creating quite the dismal prospects for people looking to purchase a home.
A number of factors are driving up housing costs, including pandemic-related supply-chain disruptions, increasing costs of building materials, and low interest rates. Ordinarily, even experienced real estate investors end up having to save up for a house, so there’s a fat chance a first-time homebuyer will have that kind of money lying around on the spot.
In truth, it’s rare for most people to pay for a new house in one installment. Sometimes, the full payment can’t be made in even several more installments. When you buy a house, you usually make a down payment, which is only a percentage of the original price, and the rest of the sum is borrowed. This borrowed sum is called a mortgage loan.
Types of Loans for Home Buyers
When it comes to securing a loan, you have several options to choose from. Here are a few common types of home buyer loans people typically go for in Texas:
Fixed-Rate Conventional Loan
This type of loan allows the interest rate to remain the same throughout the life of the loan. This means that you pay back the same, predictable amount every month. There are sub-categories to fixed-rate loans themselves too. They come in year-based plans for 15 years and 30 years. The 30-year fixed-rate mortgage is the most popular. Since it’s the longer kind, your monthly costs also get reduced, and you have more time at hand to pay everything back.
Adjustable-Rate Conventional Loan
Throughout the loan’s term, the interest rate is going to vary for an adjustable-rate conventional loan. The initial rate is often lower than most other loans, so you can benefit from smaller payments for some time in the beginning, though future costs will climb up. People who plan to pay back their mortgage quickly usually find this type of loan very suitable.
FHA Loan
If you have a low credit score, you should go for this kind of loan. These mortgages are insured by the Federal Housing Administration and give those people an opportunity to purchase a home that might otherwise have had a hard time doing so.
USDA Loan
These loans are part of an assistance program and are funded by the US Department of Agriculture. A USDA loan is available for people from low-income households, wherein they can benefit from zero down payment and below-market mortgage rates. If you’re a homebuyer in the suburbs that meets certain requirements, you’re able to secure a USDA loan.
Still can’t decide what loan to go for? Contact us at Z Finance Solutions in Texas! We offer a full range of home buying assistance services that combines loan services and realtor work. We’ll break down the procedure of obtaining a home loan step-by-step and streamline your journey to becoming a homeowner.