Understanding the most common types of mortgage loans available today
There are many choices when it comes to the types of mortgage loans you can apply for when buying a home. Each one comes with it’s own set of options, qualifications, and rules. But it’s important to understand the most common types of loans at their most basic level. Especially once your Lender starts talking about rates, points and qualifying ratios! So here are your options. It’s as simple as A, B, C, and F (hey, nothing is perfect).
So, what is a mortgage? By definition, a mortgage is a legal document that promises property to the lender as security for payment of a debt.
A: Adjustable-Rate (ARM)
This is a mortgage in which the interest rate floats up or down according to a specified index. The interest rate is “adjusted” at certain time intervals (such as six months or one year), usually having a “cap rate” or maximum rate of change per adjustment interval (such as 1%, or 4%). Terms such as “one year ARM” generally identify the adjustment interval (interest rate adjusted after one year).
B: Balloon
This is a unique type of loan, as it is rather short. You make a monthly payment for 5 – 7 years, based on a term of 30 years. There’s often a low interest rate, and it can be easier to qualify for this versus a traditional 30-year-fixed. A balloon mortgage can be an excellent option for many home buyers. There is, however, a risk to consider. At the end of your 5-7 year loan term you will need to pay off the outstanding balance. This usually requires you to either refinance, sell your home, or convert the balloon mortgage to a traditional mortgage at the current interest rate.
C: Conventional
These loans are neither insured nor guaranteed by the government. As such, conventional loans represent a greater risk to lenders than government backed loans. Conventional loans can start with as low as 5% down, but if you can put at least a 20% down payment (80% LTV) you can avoid paying private mortgage insurance.
F: FHA
Federal Housing Administration loans are available to all types of borrowers, not just first-time buyers. You can read more about the differences between a conventional loan and an FHA loan in one of our previous blogs.
F: Fixed Rate
The most common type of home loan is the fixed-rate mortgage. The interest rate remains the same for the life of the loan, so the principal and interest remain the same, too. This is one of the best reasons to buy vs rent, as rents rise over time where as most mortgages stay constant for the life of the loan.
If you’re interested in learning more, or would like to apply for a loan, contact our preferred lender, Keith Harris.
of Scott’s for more than 11 years, and he has represented more than $120 million in real estate transactions over his career. As a homeowner, Scott has walked in the Buyer’s & Seller’s shoes many times. Scott’s personal experience with Real Estate inspired him to want to be a leader in the industry to ensure all real estate clients have a positive experience. This inspiration is what lead him to co-found the JS Realty Team with his partner, 
Sarah Taylor is one of the Co-Founders of the 
inspection. At the same time as the home inspection, we will schedule any other inspections we deem necessary. We will meet our buyer and Inspector at the home for the inspection. After a thorough inspection, the Inspector will provide us with a full report of the good features as well as areas of concern about the home. We will review this report with our buyer and decide which items we will ask the seller to fix. If there are major concerns that make the buyer too uneasy about the home then we will void the contract and search for other homes. If the buyer and seller agree to the home inspection terms, then we will move on to the next step. As long as we are comfortable with the inspections, we will proceed.
read the disclosure packet and by Virginia law if they are not content with the rules and finances of the community, the buyer can void the contract.
possible about what our buyer is looking for in a home. Every buyer has different needs and we want to tailor their search to those desires. Discussing the buyers comfort price, ideal location, school systems, and housing concerns (number of bedrooms/baths, garage, yard size, etc.) are just the beginning of what we cover during our initial consultation. After that, we follow a few key steps to getting our buyer into their new home:
through Listingbook which will allow them to search in real time, on their own, through the same MLS system that Realtors use.
paperwork, the negotiating begins. This is where our experience of selling over $200 million in Real Estate transactions enables us to negotiate the best deal possible for our clients. If buyer and seller agree to all terms of the contract, we are ratified!
contracts need to be carefully reviewed to ensure you know exactly what the potential buyer is proposing. Only after you have reviewed and researched all offers will you be able to proceed to choose the contract that works best for you.
In this 2-part series, we’re walking you through everything to consider when reviewing an offer to purchase your home for a successful and smooth transaction. If you missed PART 1, you can find it 
you need to give them time. Financing is typically 3-4 weeks and it is the weakest of the contingencies. The buyer has control over the home inspection and HOA disclosure contingencies; however they do not have as much control over the appraisal and financing. That is why we want the Home Inspection completed and HOA documents reviewed as early on in the process as possible.