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    Which Mortgage Is Right for You?

    ask your ZipRealty Realtor for a recommendation on which kind of loan will be best for you

    If just hearing the word "mortgage" is enough to make your head spin, you're not alone. Many first-time homebuyers cringe at the very thought of applying for a mortgage – and feel like they're navigating a sea of confusing terminology and fine print during the process.

    But the more you know, the easier the process becomes. You can find plenty of mortgages out there that can match your personal financial philosophy, timeline, and goals. Talking to a financial advisor is a great way to get started – and your ZipReality agent can even recommend one to you.

    Here's a breakdown of the different types of mortgages – and how they can fit in with your plans.

    Adjustable-Rate Mortgage (ARM)

    An ARM mortgage has a much lower initial interest rate than a fixed-rate mortgage, which means more affordable monthly payments. This initial rate is usually locked in for one or more years, but be warned – it won't stay there. Once the initial term is over, the interest rate can rise and fall based on the current market rates established by the Federal government.

    ARM mortgages are a smart option for buyers who are planning on selling their home in the near future, or have enough money to pay off the loan in a short period of time.

    Fixed-Rate Mortgage (FRM)

    A fixed-rate mortgage means that your interest rate will remain the same for the entire life of the home loan. Financing for this type of loan is typically spread out over 10, 15, 20, or (the most popular) 30 years, depending on your needs.

    The stability of a fixed-rate mortgage is a huge appeal and allows homeowners to manage their money with confidence.

    Jumbo Loans

    If you have your heart set on a super high-priced home, a jumbo loan might be your best option to lock it down. Jumbo home loans are larger than the conforming loan limit in your area.

    Jumbos generally have higher down payment requirements – sometimes higher than 20% – and require sufficient assets and excellent credit.

    Government Backed Mortgages

    VA Loans

    VA loans are guaranteed by the U.S. Department of Veterans Affairs and allow service members, veterans, and eligible surviving spouses to purchase homes without making a down payment. Just like other fixed-rate mortgages, VA loan interest rates are locked in for the lifetime of the loan.

    FHA Loans

    FHA loans are insured by the Federal Housing Authority and require a small down payment, typically in the 2.5 to 5 percent range. There are no income limits; however, there are limits on how much you can borrow. Typically, a FHA loan will be relatively small compared to home prices in your area.

    Remember – the right mortgage has a big impact on how much you end up paying upfront, monthly, and over the lifetime of your loan. Selecting a mortgage is an important decision, so be sure to shop around and reach out to a financial advisor before you make your final choice. It's also always a good idea to keep an eye out on market rates to help you monitor and predict any changes in interest rates.

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