Different Types of Long Beach Home Loans
Learn about the different types of loans that you can get to purchase a property in Long Beach or build a home.
Adjustable Rate Loan: also known as a variable rate loan or an ARM refers to the interest rate that goes up and down over the life of the loan. The interest rate is adjusted to coincide with changes in the index on which the rate is based.
There is a cap in the interest rate so it does not exceed a certain percentage. The benefit to this type of loan is that the interest rate is usually lower than a fixed interest rate which may allow you to qualify for a larger loan amount and purchase price.
Assumable Loan: the buyer assumes the seller’s loan with the seller’s interest rate and terms. The buyer may pay the seller the remainder, equity, in cash.
Balloon Payment Loan: this loan has a fixed rate with a shortened due date. At the end of the loan, the borrower, would have to make a lump sum payment to the bank or refinancing the loan amount.
Buy-Down: this allows you to buy down the beginning interest rate by paying the bank additional money upfront and lowering your monthly payments.
Conventional Loans: adjustable rate, fixed rate and balloon payment are all types of conventional loans. A FHA or VA loan are not.
Commercial Loans – are primary used for purchasing of commercial buildings, for construction of buildings and for investors of income property with 5 or more units
FHA Loan: is a loan from the Federal Housing Administration that is secured by investors. This type of loan is used when the buyer does not have a large down payment. The FHA program has a cap on the maximum amount of the loan. Check with your lender on the requirements of this program.
Fixed rate: the loan is at a fixed rate of interest over the life of the loan. Basically, you will know what your payments are every month.
VA Loan: If you have served in the US Armed Forces, you may apply for a VA (Veterans Adminstration) loan which guarantees up to 100% of the purchase price and requires little or no down payment. The seller pays much of the closing costs…so you would have to find a seller willing to do that.
We are happy to refer you to one of the many Loan Consultant that we know in Southern California. Learn what you are qualified for now in terms of price range so you can search more effectively online or with the help of a real estate professional.