If you’re looking for Michigan home loans, Gem Home Loans should be your first stop. We’ll work closely with you to look at all of your options. Our experts will take a thorough look at your financial situation to help you determine if a 15-year mortgage, a 30-year mortgage, or some other type of program will work best for you. No matter what route you decide to take, we’ll make sure you have all the information you need so you are completely comfortable.

A Brief Look at Home Loans

Michigan Home LoansThere are a lot of different home loan programs, but the two main ones are FHA and conventional loans. Backed by the Federal Housing Administration, an FHA loan is typically fairly easy to get. It offers very favorable terms, especially for people who are first-time homebuyers. Why is an FHA loan easier to obtain? Because, like other loans backed by the government, an FHA loan carries less risk for lenders. They know that, even if the borrower defaults on the loan, the government will cover it up to a certain amount.

A conventional loan, on the other hand, is one that isn’t backed by a governmental agency such as the FHA. But it’s still a very popular option. It’s not as easy to obtain a conventional loan. You’ll need a higher credit score and meet other requirements. However, you usually won’t have to pay as much in interest over the life of the loan.

The down payment is another area in which FHA and conventional loans are different. You’ll typically have to pay about 3.5 percent for an FHA loan, whereas you’ll need at least 3 percent down for a conventional loan – depending on your credit score. If you have a score of 580 or higher, you will probably only need 3.5 percent down. However, if your score is in the 500-579 range, you may need to come up with as much as 10 percent.

15- and 30-Year Mortgages

Conventional loans come in two major forms – 15- and 30-year mortgages. Like all mortgage programs, there are advantages and disadvantages to both.

If you get a 15-year mortgage, you’ll obviously pay off the home twice as fast than if you had a 30-year mortgage. As a result, you’ll be paying far less interest – possibly tens of thousands of dollars less – than with a 30-year mortgage. You’ll also build equity a lot faster, and you might also receive a lower interest rate. Banks tend to view shorter-term loans as less of a risk, so they typically offer better rates.

However, you need to think long and hard about your finances if you want to pursue a 15-year loan. You’ll be paying a lot more per month – typically, at least $650 more for a $250,000 home with a 4 percent interest rate – and you may need to settle for a smaller home as a result.

Talk to Gem Home Loans to Learn More

As you can see, there are a lot of options when it comes to Michigan home loans. Many people find the complexities overwhelming at times. At Gem Home Loans, however, we make the process simple and stress-free. Let us show you how by giving us a call at (248) 780-1030 or contacting us online. We look forward to hearing from you.