Choosing the Best Mortgage Option to Purchase a San Diego Home

To make a San Diego home purchase many people need to use a mortgage.  While this seems cut and dry there are actually a lot of questions a potential homeowner needs to ask themselves.  

There are many mortgages available to San Diego home buyers and each one is best suited for different situations.  No two San Diego home buyers are going to have the same needs in a mortgage and they should explore all their options before dedicating themselves to a mortgage.

Common Mortgages

The two common mortgages people look at are fixed rate and adjustable rate loans.  A fixed rate loan will keep one interest rate for the entire loan regardless of how long the long term is.  Those who want to own the home long-term and those who can secure a good interest rate will benefit from this loan.  

An adjustable rate loan will have an every changing interest rate.  The interest rate will change at different times during the loan, typically once a year.  It can be helpful for those who are starting with a high-interest rate and who are hoping to get a low rate when the market changes.

Government Loans or Conventional Loans

Some loans are government insured either in full or in part.  These types of loans may include ones provided by Veteran Affairs or the Federal Housing Administration.  

Most loans are at the risk of the lender who provides the mortgage.  These conventional loans go back to the lender if a homeowner faces foreclosure.  

Non-Conforming or Conforming Mortgages

There are government benefactors that will purchase a loan from a lender. Common ones are Fannie Mae and Freddie Mac. A conforming mortgage will meet the standards set by these benefactors.  

If a loan does not meet these standards it is considered non-conforming. Since these loans are not going to be sold on the mortgage market a lender will usually add on a higher interest rate because they are taking a larger risk.

The Federal Housing Administration

A first-time home San Diego buyer should look into an FHA loan.  These loans have lower down payments, do not require higher credit, and will often have a better interest rate. However, the homeowner will have to pay for mortgage insurance over the life of the loan.  

These loans are insured by the FHA and this safety net allows them to have less strict guidelines.  

Veteran Affairs

This type of loan is only provided to the families of veterans or active duty members, veterans, and active duty members.  There are low-interest rates offered and they will not need a down payment to secure the loan.  

With a loan in mind, a San Diego borrower should check with their lender to see what fees they will need to pay on their mortgage.  There are many factors that go into picking a mortgage including the loan terms and interest rate along with the ability to have a flexible down payment. 

At the end of the day, keep in mind that there is a mortgage out there for almost any San Diego buyer who is willing to put in the time to research their best option.