Buying A Home In The USA And Types Of Mortgage Loans
If you’re looking to buy a home in the USA the first step in the process is not contacting a real-estate agent but instead look into the term “how much home can you afford”. What does this term mean?
The term has nothing to do with only the home price but a detailed examination of your financial situation that also includes your mortgage loans and potential loan payments to evaluate your home ownership.
Types Of Mortgage Loans Provided In The USA –
Before kickstarting with the preapproval and pre-qualification process to buy a home in the USA, one must also understand the types of mortgage loans available in the USA.
The types of mortgage loans in the USA includes conventional loans and government bank loans.
What is the Conventional loan?
This is a traditional loan that is not backed by or insured by the government of the USA.
Government-backed loans include-
FHA Loans- FHA stands for Federal Housing Administration, which is a part of the Department of Housing and Urban Development (DHU) and offers loans insured and backed by the federal government.
Note- FHA loans often provide lower interest rates.
VA Loans- The term VA stands for veteran and active members of the US military.
The VA home loans also provide lower interest rates.
USDA Loan- The USDA is a non-conventional loan provided by the United States Department of Agriculture to purchase a home in a rural area in the USA. Prospective, low and middle-income buyers can avail of such loan provided by the USDA.
