Reader’s Question:

My family and I have always wanted a home in Dallas. So I am thinking about applying for a home loan. Can you give me an idea on the general types of loans that are available?

Amber

Dallas, TX

Homebuyers are lucky that there are more financing options available nowadays than there has ever been before. There are financing packages designed to meet the needs of every prospect homebuyer either from traditional mortgages to adjustable-rate and hybrid loans. Although the different choices seem very overwhelming at first, the overall goal is really quite simple: you want to find a loan that fits both your current financial situation and of course, your future plans.

But first, we need to understand the general types of loans you may want to apply:

• Fixed-rate- Traditionally, fixed-rate mortgages have been the most popular choice among homeowners, because the fixed monthly payment is easy to plan and budget for, and can help protect against inflation because the interest rate remains stable over the life of the loan.
• Adjustable-rate – Adjustable-rate term Loan has interests that adjust periodically as rates shift. This may let you take advantage of lower near-term interest rates because interest rate and monthly payment can change over the life of the loan.
• Hybrid loans- This is a combination of both fixed-rate and adjustable-rate features. Usually, a hybrid loan may start with a fixed-rate for a period of time, and then later can be converted to an adjustable-rate mortgage. But be sure to check with your lender and find out how much the rate may increase after the conversion.
• Conventional loans- This loan is simply a loan offered by a traditional private lender. It can either be fixed-rate, adjustable, hybrid or other types. Some resort to this because it often requires less paperwork and typically do not have does not have a maximum allowable amount. Private individuals may have a hard time qualifying for this than government-backed loans.

Amber, it would also be helpful to know the length of time you plan to own a property in Dallas because this may have a strong influence on the type of loan you choose.

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