Finding the best home loan can be difficult. Each type of home loan offers particular pluses and minuses that appeal to different types of home buyers. The first step to finding the best home loan is deciding what type of buyer you are. After that, examine all the pros and cons of the loans associated with your kind of home buyer. Finally, evaluate the numbers using a home loan calculator to determine exactly which loan type works best for your pocketbook.

 

Home buyers typically fall into four primary categories (these is some overlap) that will determine their best type of loan: first-timers, up graders, non-traditional, and refinancers. Let’s look at which types of loans primarily apply to each category:

 

First time home buyers: first-timers have a lot of options. Variable rates are available for buyers who want to take advantage of a shifting market and save money if rates drop during the life of the home loan, while fixed rates are there for borrowers who may not be so adventurous. If lower payments are needed up front, just until first-timers can get established, then introductory rate “honeymoon” loans are available. First-timers can also look into loans available to non-traditional borrowers if their credit history or documentation is limited.
Up graders: Up graders can be current home owners who are seeking a loan to get into a newer or better home, anyone looking to build a new house, or home owners who need funds to build on to existing homes to increase value. Bridging home loans help get home owners into new homes by covering the gap in funds that many will find when trying to buy one home when selling another. Construction or owner/builder loans are available from lenders for borrowers who have purchased land and want to build a brand new home. For home owners who want to remodel or add on to their house, line of credit or home equity loans are an attractive option for using the value in their existing property.

 

Non-traditional borrowers: Things can be difficult for home buyers who are self-employed or borrowers whose credit history or employment record is less than perfect. The buying process can also be rough for anyone who doesn’t have a lot of money set aside for a down payment. Borrowers want to serve these clients, too, so low-doc and low/no down payment loans are also available. Keep in mind that fees and rates on these loans may be higher, but this may be to sole option for some.

 

Refinancers: Like some up graders, refinancers are trying to save money or get the best value out of their existing home, either by getting a new mortgage with better terms, or by getting a home loan based on their existing equity. Many loan types listed here, including line of credit, bridging loan and owner/builder apply to refinancers. Older home owners can also take advantage of reverse mortgages for funding.

 

After determining which type of loan may be right for you based on this list, look into each one individually in depth to completely weigh all pros and cons. Once you have narrowed down to two or three, run your figures through a the online mortgage calculator for that specific mortgage type to find out what your cost benefits are and to evaluate what you can afford in each situation. Careful evaluation of what kind of buyer you are, what loan types apply for you, and the impact on you budget will help you find the best home loan.