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Real estate mortgage: A guide for homebuyers

Mortgage application form with house key

You’ll hear the terms “real estate mortgage” often when buying your home and with good reason. It’s one of the most essential things you need for your home purchase unless you’re making an all-cash offer.

What is a mortgage loan exactly and how do you get one? Continue reading to find out.

What’s a real estate mortgage?

A real estate mortgage is a type of loan homebuyers can use to purchase a real estate property. Instead of paying the full amount upfront, homebuyers can defer payment to a set timeframe.

Real estate mortgage costs vary depending on the price of the property, credit score of the buyer, bank fees, interest rates, and other factors. Every bank or mortgage lender provides its rates so it’s best to do your research and shop around for the best deal.

What are the different types of real estate mortgages?

Not all real estate mortgages are made the same. Here are the most common types of mortgage loans you might encounter:

  • Fixed-rate mortgage

    A fixed-rate mortgage is a type of mortgage that has one standard interest rate for the lifetime of the loan. This means you will pay the same mortgage price monthly until the end of the mortgage term.

    Fixed-rate mortgages usually have 15-, 20-, and 30-year loan terms. This is one of the most common mortgage types out there.
     

  • Adjustable-rate mortgage

    Adjustable-rate mortgages, as the name suggests, have fluctuating interest rates. The mortgage payments you make can go up or down depending on market conditions.

    Different banks offer different adjustable-rate mortgage plans. Some have a set mortgage rate for a few years then change into an adjustable rate for the rest of the mortgage term.
     

  • Conventional loan

    These mortgages are home loans not insured or secured by the federal government. The two types of conventional loans are conforming and non-conforming loans.

    A conforming loan meets loan limits by the Federal Housing Finance Agency, while non-conforming loans don’t.
     

  • Jumbo mortgage

    A jumbo mortgage exceeds the borrow limits set by the Federal Housing Finance Agency. These cannot be purchased, guaranteed, or securitized by Fannie Mae or Freddie Mac, which are federally backed mortgage companies.

    Jumbo loans are typically used for financing luxury properties or homes with higher values. As a result, the requirements are more extensive than regular loans because they are costlier. A lender must have a great credit score, a low debt-to-income ratio, and must be able to pay a down payment of around 15% of the purchase price.

Before choosing the type of mortgage for you, discuss your mortgage options with a real estate professional.

If you’re ready to start your home search in La Cañada Flintridge, get in touch.

Finding the perfect home is easy when you have an expert real estate agent by your side. I’m Kathy Seuylemezian, and I’m here to help you every step of your home purchase.

Explore your options in the La Cañada Flintridge real estate market or neighboring communities. Reach out to me by calling 818.949.5205 or sending me an email at kathy(at)imuragent(dotted)com today!