Top Home Loan Types Found in Madison, WI
For most home buyers, taking out a loan or a mortgage will be necessary. With that said, it's important to understand the most common types of home loan you will find when shopping for a home in Madison, Wisconsin. Here's a look at the top choices for your mortgage.
Adjustable-Rate Mortgage or ARM
The ARM is a very popular choice for a home loan because it provides a low teaser rate. It's best for those looking to buy a home, but not looking to stay for more than five or maybe ten years. This type of mortgage can also work well for those struggling to qualify for a fixed-rate loan. It can also be refinanced into a fixed-rate loan in the future.
An ARM will have a rate that will remain fixed for a few years, and then can adjust after that. It can adjust up or down, depending on the market rate.
Fixed-Rate Home Loan
Maybe the most common type of home loan, the fixed-rate loan is straight-forward and easy to understand. You're quoted a rate that will not change over the life of the loan. This means, your mortgage payment will never change. As long as you don't refinance this type of mortgage, your payment will always be easy to predict.
If you're a veteran of the United States military, you likely qualify for a VA loan. This loam program is open to anybody serving 90 consecutive day during war time, 180 days during peacetime or 6 years in the reserves. You may qualify for a no money down mortgage with this type of loan.
The FHA loan program or Federal Housing Administration loan program offer a lower down payment than conventional loans. You may only need as little as 3.5% down with this program. However, you will not have much flexibility. The rate is usually fixed on a 15 or 30 year term and byers will have to purchase mortgage insurance.
Other common types of home loans in Madison include:
- USDA loans
- WHEDA loans
- Bridge loans
Consider which program may be best for you and make sure you get pre-approved before you start shopping for a new home.