Understand Your Loan Options When Buying Del Mar Homes

If you are considering buying a Del Mar home, you have more options available to you today that ever before.  From traditional, fixed-rate mortgages to ARM and hybrid loans, there are lenders offering packages that suit the needs of every different type of buyer.

The goal: Find a loan that best fits your current and future financial position. 

Most loans are categorized into one of the following: fixed-rate, adjustable-rate or ARM, and hybrid loans ( these loans combine features of both ARM and fixed ).

* Fixed-rate mortgages

A fixed-rate mortgage is a loan that has the same interest rate for the life of the loan. These are the most popular choice among homeowners considering that the fixed monthly payment can be budgeted for. 

* Adjustable-rate mortgages (ARM)

In an adjustable-rate mortgage, the interest rate and monthly payment change over the life of the loan. The interest rate for an ARM is tied to an index that rises and falls over the term of the loan. There are caps and ceilings on this amount to protect the borrower.  These protections have made the ARM the second most popular option to borrowers. 

* Hybrid loans

Hybrid loans combine features of both fixed-rate mortgages and ARMs. A hybrid loan may begin with a fixed rate and then convert to an ARM.  Some hybrid loans do not carry the cap or ceiling for the first adjustment period to the ARM so be sure to ask your lender. 

In comparison, other hybrid loans may start with one fixed interest rate then later convert to a higher fixed interest rate for the remainder of the loan term.

* FHA and VA loans

U.S. government loan programs such as those of the Federal Housing Authority (FHA) and Department of Veterans Affairs (VA) were formed to create the opportunity of home ownership to people who may not qualify for a conventional loan. Both FHA and VA loans offer easier qualifying requirements and often require smaller or no down payments.

* Conventional loans

A conventional loan is a loan offered by a private lender. These loans are a variety of fixed-rate, adjustable, hybrid or other types of loans. Conventional loans have more stringent qualifying factors and often require less paperwork than government loans. 

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