Saturday, February 27

Housing Loan Alternatives – Choose Wisely

Being a homeowner for many people is a measure of one’s success and how far they have gone to in life. So how do you get one? Currently, there are 6 ways to obtain a mortgage for your dream home. They are tailored to fit into what kind of situation financially you might have. I have broken them down into two groups below.

If you have GOOD Credit

Bridge Loan

This is a loan granted by a lender, typically a bank that covers an interval between two transactions, like when buying a house by selling another. These are generally short-term and backed by a collateral. These are great loans for those who are financially on the right track, have good credit standing, and have a low debt-to-income ratio.


This is a loan granted to low and very low-income families in the rural areas. Although there is no down payment, you will have to pay a mortgage insurance premium and should have acceptable credit standing – preferably with no accounts in the collection status from the past year.   

VA loan

This a loan granted to Veterans by the Veterans Affairs to those who served 90 days consecutively during wartime, double that during peacetime, or had 6 years in the reserve corps. There are strict requirements though for the type of home you can purchase and it must be your primary residence.

If you have BAD Credit

FHA Loan

This type of loan is a mortgage granted by the Federal Housing Administration, as they are a low down payment, this loan gained popularity among the younger population and first-time homeowners. They do have a more lenient credit score requirement but the lower your credit score is, the higher the down payment would be as a kind of balance. There is a lot of material online and in print as guide to fha loan for you to look at when you consider this.

Adjustable Rate Mortgage or ARM

This type offers lower interest mortgage loans that stay locked for a reasonable period of time but will go up after that. Usually, the term would be 5- 10 years. This is great for those homeowners to be with Credit Scores on the lower side of the chart. Some smart borrowers tend to avoid the interest variance by selling right before the end of the lockdown period.

Fixed Rate Loan    

This loan is actually for both sides of the credit scoring table. There are fixed-rate loans that cater to those with lower scores – this is ideal because the rate is fixed for the duration of the loan and will not change no matter what the economic situation may be. The downside are higher interest rates and Insurance premium to secure against defaulters.


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