Have you ever considered trying to obtain a 15-year mortgage in Farmington Hills, Michigan? If you’ve done any kind of research into the subject, you’ve probably already learned that getting this kind of mortgage is a major commitment. It can also be filled with complexity and stress. At Gem Home Loans, however, we will make it as easy as possible. We’ll let you know if this kind of mortgage is a good idea, or if you’d be better off pursuing another type of loan.
Whether you’re looking for a 15-year mortgage or something else, it’s important that you know a little bit about how the home loan process works. There are basically two kinds of loans – ones backed by the government and so-called “conventional” loans. Here’s some quick info on both.
A government-backed loan, such as one backed by the Federal Housing Administration (FHA), is typically fairly easy to get. An FHA loan will typically offer very favorable terms and rates. In fact, most people who are first-time homebuyers will usually get an FHA loan.
A conventional loan, on the other hand, doesn’t have the backing of the U.S. government. It’s still a popular way to go, however. You also have more flexibility with a conventional loan. If, for example, you wanted to buy a summer home, you wouldn’t be able to do so with an FHA loan. The reason is that a government loan can only be used to purchase your primary residence. With a conventional loan, you could buy a vacation home, or even buy a fixer-upper that you want to sell at a later date.
There’s another big area where FHA and conventional loans differ – the amount of money you’ll need to put down. With an FHA loan, you’ll need a down payment of 3.5 percent of the home’s purchase price. The amount you’ll have to put down for a conventional loan will depend on your credit score. The higher the score, the less your down payment will be. If your score is in the 500-579 range, you might have to put down at least 10 percent.
No matter what type of loan you’re trying to get, there will be some benefits and drawbacks.
The benefits of 15-year mortgages are fantastic. You’ll only be paying 15 years of interest, as opposed to 30 years for a 30-year conventional loan. You could save tens of thousands of dollars as a result. Also, lenders tend to look at shorter-term loans as less of a risk than longer-term loans. You’ll have a good chance of getting a lower interest rate.
The downside of a 15-year mortgage is the monthly payment. You’ll be paying hundreds more each month than you would with a 30-year loan. As a result, you’ll need to take a long, hard look at your finances. You’ll not only need enough money to handle your mortgage payment, you’ll also need enough for all of your other expenses as well. There’s a chance you won’t be able to get as large a home with a 15-year loan than you could with a 30-year mortgage.
The experts with Gem Home Loans are here to answer all of your questions regarding a 15-year mortgage in Farmington Hills, Michigan. Give us a call at (248) 780-1030 or use our online contact form to get in touch.