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8 Different Types of Home Loans to Consider [Guest Post]

Buying a new home, but you are unsure about funding?

When anyone decides to buy a new home, the first thought that is bound to come in their mind is how to manage the funding. Well, considering the current economic times, arranging funds should be the least of your worries because there are several loan options available in the finance market as opposed to earlier times.

If you have the dream of owning your home, you should certainly try your best to materialize it. Buying a new home does not only offer you a permanent roof to live under, but also promises good returns in terms of investment.

If you are planning to buy a new home, here are a few types of loans that you can consider applying for.

  • Fixed rate home loans: Fixed rate home loans have a fixed interest rate for the entire life of the loan. These loans are a safe option because they save you from the risk of fluctuating interest rates.
  • Variable rate home loans: The interest rate of variable rate home loans is subject to change based on current economic trends. The rate of interest depends on a money market index. These loans have a lower initial rate and you need to make smaller payments initially.
  • Home equity loans: Home equity loans are provided to borrowers using the equity in their home as collateral. These loans are available with fixed as well as variable interest rates.
  • Line of credit loans: These loans are similar to home equity loans. Under this type, the money that you borrow against equity in your home can be withdrawn using a type of a credit card. There is a specified credit limit for the cards.
  • Construction loans: Those who need financial assistance for building their home can avail construction loans. These are specifically given to those who are constructing new homes.
  • Low-doc loans: As compared to other loans, low-doc loans require fewer documents to get the loan sanctioned. These loans work particularly well for self-employed individuals.
  • Investment home loans: These loans provide funding to buy a new home for investment purposes. So, if you wish to purchase an investment property, you ought to check investment home loans.
  • Interest only home loans: For this type of loan, initially, you only need to repay the interest calculated on the principal amount. With these loans, the initial payments are lower than the later payments.

Well, now that you are aware of a few types of home loans, here are a few home loans tips for you. Firstly, do your research well in advance so that you are well armed. Secondly, calculate the home loan amount using the interest rate provided to you. This will help you understand if you are choosing a loan that abides by your budget. Then, opt for a home loan that best suits your needs and do not bite off more than you can chew because it will create trouble for you in the future. Lastly, if you truly wish to buy new home, maintain a good credit record.

Author’s Bio:

Stella Jhon, is a real estate agent but not working for specific real estate firm. She is working as a property manager in different real estate & property management advisor. Visit: more information.