Loan Types in Institutional Mortgage Loans
One of the first steps you have to take while shopping for mortgages is to understand the type of mortgage that suits your needs.
These are provided only to qualified veterans and require little to no down payment.
These are supported by the Federal Housing Administration. They only need a 3.5% down payment in case you qualify. This usually helps people with quite a lot of cash reserves. To compensate for paying lower than 20% down payment, you will have to pay private mortgage insurance (PMI), which is a monthly payment for security in the event of default.
These mortgages require a minimum of 20% down payment. They do not need PMI. Note that a conventional loan is one of your best choices if you are short on money in your savings account in order to make the down payment and other closing charges.
These loans should be used in case you are availing funds above the upper limit of the normal rate. As a result of the extremely high amounts involved, these loans have special needs and credit requirements you need to meet before gaining approval.