Let's Continue Discussing Types of Mortgage Loans...

                 

Nichole Whitmire, Cumming, GA Real Estate Associate | RE/MAX Regency (remax.com)

Let's continue the discussion of types of mortgage loans. Two other types of mortgages that are commonly available are VA loans and ARM loans.  

VA loans are mortgages backed by the US Department of Veterans Affairs. These mortgages are specifically purposed for military veterans, servicepersons and their surviving eligible spouses.  VA loans are considered a very favorable option if available. Some characteristics of VA mortgage loans are low interest rates, no down payment requirement and no PMI requirement. Another positive characteristic of VA home loans is no minimum credit score requirement, though lenders can evaluate the potential borrower's overall creditworthiness.

ARM loans (Adjustable Rate Mortgages) are mortgage loans with a low introductory interest rate that generally increases after the initial set period of time. The initial interest rate of ARM loans is usually lower than would be a fixed interest rate mortgage in comparison. These types of mortgages usually adjust annually after the initial set period of the introductory rate. ARMs are considered risky due to the changing interest rates characteristic when compared to some other types of home loans. Notably, ARM home loans do usually have rate caps, which limit the amounts of allowable increases yearly for the specified loan. Some borrowers though, may find ARM home loans appealing if they are anticipating having the loan for a limited amount of time.

Either of these loan types mentioned above can be attractive to certain borrowers, depending on their individual circumstances. Also, keep in mind that there are additional types of mortgage loans that were not included in this list, that could also be suitable depending on the borrower needs.

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