A Real Estate Investment is Rewarding: Tips on How to Choose the Best Mortgage

Purchasing your home is a big financial decision, and choosing the right mortgage is an important decision that you’ll have to make during the home-buying process. Because there are several different options, accessing an affordable mortgage that will meet all your financial goals isn’t easy.

last updated Friday, April 11, 2025
#Best Mortgage #Private Real Estate

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by John Burson

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Begin by asking yourself the amount of money you can afford. After you have considered your credit score, debts, monthly bills, and income, you can decide on your loan terms. Three major mortgage decisions you can consider:

Conventional or Government-backed Mortgage

Mortgages are divided into two main categories: conventional loans guaranteed by private real estate investment lenders or banking institutions and government-insured loans. A government-insured loan can be in one of the following forms:

VA loans: These are loans that the Department of Veterans Affairs backs, offering buyers low and sometimes no down payment options.

FHA loans: These loans are backed by the Federal Housing Administration, and they are an option for most people because they make the home-buying process more affordable. First-time homebuyers only need a 3.5% loan down payment.

USDA loans: These mortgages are insured by the U.S. Department of Agriculture and are meant to fund rural real estate investment buyers who meet the required income.

Fixed or Adjustable Interest Rate Type of Loans

If you decide to get this loan, you’ll have to decide on whether to choose between a fixed or an adjustable interest rate loan. The interest rates on fixed-rate loans never change. If you’re fully settled in your career, want to set down some roots, and have a growing family, then a 15 or 30-year fixed-rate mortgage may be needed.

On the other hand, adjustable-rate mortgages have rates that fluctuate at certain levels. They begin with low mortgage interest rates, but the monthly interest rates can either increase or decrease after the initial term.

Conforming or Non-conforming Loans

Your lender can tell the level of your financial risk depending on the amount you borrow for real estate investment. Real estate investment loans are either conforming or non-conforming. Conforming mortgages require that you meet the set guidelines by Fannie Mae and Freddie Mac. On the other hand, non-conforming or jumbo loans are loan amounts higher than the set conforming loan limits.

 
 
 

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