Whether you’re a first-time buyer or real estate investor, buying a home is a big decision. Securing a mortgage can be stressful and complicated, with all the rates, fees, and paperwork to worry about. Luckily for you, this website holds calculated reviews and recommendations to the best mortgage lenders around. We’ve found everything there is to know about the mortgage lending industry to save you the trouble.
A conventional mortgage is the most common form of mortgage. These types of home loans involve two parties: the borrower (you) and a lender. Most lenders require their borrowers to provide at least a 20% down payment to secure a conventional mortgage. For example, if you purchase a home for $500,000, you will be required by your lender to put down $100,000, and they will loan you the remaining $400,000.
An FHA loan is a government-backed loan administered by the Federal Housing Administration for buyers who have poor credit and/or are unable to provide the required 20% down payment on their home. FHA loans come in two forms: 3.5% down payment for borrowers with credit of 580-619, or 10% down payment for borrowers with as low as 500-579 credit score. One thing to consider when taking out an FHA loan is that you must purchase monthly private mortgage insurance. You are able to stop paying for this once you reach 20% equity.
The VA loan is a government-backed loan administered by the Department of Veteran Affairs. Some lenders offer VA loans where you won’t need to put anything down.. Like the FHA loan, monthly PMI is a condition of taking out a VA loan. People eligible for a VA loan include: Veterans who have served at least 90 consecutive days of active service in wartime or 181 days of active service in peacetime; members of the National Guard and Reserve who have served at least 6 years; and spouses of veterans who died in the line of duty or as a consequence of a service-related injury.
This is the more popular of the two options, especially among first-time home buyers. Fixed-rate mortgages are mortgages with fixed rates for the entire duration of the loan. When you take a fixed-rate mortgage, you pay more in year one than you would if you took an adjustable-rate mortgage. However, your rate never increases (or decreases), meaning you can plan exactly how much you’ll pay in monthly instalments across the life of the loan. Once you’re locked into a fixed rate, you’re protected when the Fed and the banks start raising rates.
Adjustable-rate mortgages, also known as ARMs or variable-rate mortgages, carry higher risk and higher reward than fixed rates. ARMs have cheaper rates than fied=rate mortgages in their first year, but they have the possibility of increasing interest rates in later years. ARMs take two things into account - the number of years that your introductory rate is applicable and the intervals, or how often, your rate gets updated to the current going interest rate. ARMs are primarily used by borrowers who are willing to take on a good bit of risk, or intend to pay off their mortgage balance at a relatively fsat rate.
The amount you can borrow with a mortgage depends on things like your income, credit score, debt-to-income ratio, down payment, and the loan type. Lenders use all of these to figure out your borrowing limit and what you can afford.
A fixed-rate mortgage keeps the same interest rate for the life of the loan, giving you stable and predictable monthly payments. An adjustable-rate mortgage (ARM), on the other hand, starts with a fixed rate for a set period, then adjusts periodically based on market trends—causing your payments to go up or down over time.
Closing costs are the fees involved in finalizing your mortgage and transferring ownership of the home. They often include lender charges, appraisal fees, title insurance, escrow services, and prepaid items like property taxes and homeowners insurance. Typically, both the buyer and seller share these costs, but the split can vary based on the purchase agreement. In some cases, a no-closing-cost mortgage may be available if you’re a strong borrower.
Mortgage preapproval is an initial review of your finances to determine how much you can borrow. It involves submitting an application and documents for a lender to assess your credit, income, and overall financial profile. Getting preapproved helps clarify your budget and makes your offer more competitive when buying a home.
Many mortgage loans let you pay off your loan early without prepayment penalties. By making extra payments toward the principal or refinancing into a shorter term, you can reduce your loan balance faster and save on interest. Always review your loan agreement or ask your lender to confirm any rules about prepayment.
A mortgage refinance is when you replace your existing home loan with a new one—typically to get better terms, lower your interest rate, reduce your monthly payments, or tap into your home equity. It’s a popular option for homeowners looking to save money or access cash without selling their home.
When you refinance, you work with a lender (bank, credit union, or mortgage company) to apply for a new mortgage that pays off your current one. The lender evaluates your credit score, income, home equity, and overall financial profile to determine your eligibility and loan terms.
Why Homeowners Refinance
There are several reasons to consider refinancing:
• Lower your interest rate and monthly payments
• Switch loan terms (e.g., from a 30-year to a 15-year mortgage)
• Convert from an adjustable-rate to a fixed-rate loan
• Cash-out refinance to access equity for renovations, debt consolidation, or major expenses
What to Know Before Refinancing
• Loan types and rates: You can choose between fixed-rate or adjustable-rate refinancing options. Rates and terms will depend on your credit, equity, income, and the lender’s policies.
• Investment properties: Refinancing for a rental or second home may come with higher rates and stricter requirements, so make sure your lender knows how the property is used.
• Break-even point: Consider how long you plan to stay in the home—this helps determine if the cost of refinancing is worth the long-term savings.
The Bottom Line
Refinancing your mortgage can be a smart financial move, especially when rates are low or your credit has improved. It’s a way to reduce costs, free up cash, or reach new financial goals—all while staying in the home you already own.
