February 7, 2022

Which Mortgage Option Is Right for Me?

When buying a new home, you can find several mortgage loans on the market today—such as 15-year mortgage loans in Massachusetts or government-funded housing loans in Rhode Island. So how do you find the right loan for you when the mortgage options become overwhelming?

You might feel uncertain about which mortgage type would work best for your individual needs. BayCoast Bank and our team of expert mortgage lenders are here to help! If you want to make a fully informed decision, take a moment to review the main kinds of mortgage loans available below: 

Conventional and Jumbo Mortgage Loans

One of the main categories of mortgage loans is called conventional and jumbo loans. These loans are some of the most popular, with homebuyers often choosing fixed-rate loans, adjustable-rate loans, and jumbo loans for their mortgages.

Review the main kinds of conventional and jumbo loans below:

Fixed-rate mortgage loans

Fixed-rate loans refer to loans that stay at the same rate for the entire length of the loan. These loans must follow FHLMC and FNMA guidelines and typically come in a 30-year term length. You can use these loans for investment properties with one to four units, secondary homes, and primary residences.

Adjustable-Rate Mortgage Loans

In contrast to fixed-rate loans, adjustable-rate loans refer to loans where the rate changes over their term. The rates adjust based on buydown points, contract terms, indexes, and market rates. These traditional loans comply with FHLMC and FNMA guidelines. Like a fixed-rate loan, you can use this loan for investment properties with one to four units, secondary homes, and primary residences.

Jumbo Mortgage Loans

When a property is too expensive for a conventional conforming loan to cover, buyers can turn to jumbo loans. In most counties, the Federal Housing Finance Agency sets the maximum amount for a conforming loan at $548,250. If a home exceeds this limit, a homeowner can use a jumbo loan to finance the home. These loans are offered with adjustable and fixed interest rates, and they can also feature special financing.

Government-Funded Mortgage Loan Programs

Besides conventional and jumbo loans, many buyers can also receive financing from various government programs. Learn more about these loans below:

Mass Housing Mortgage Loans

BayCoast Mortgage Company partners with the MassHousing Buy Cities Program for Fall River and New Bedford, Massachusetts, to offer mass housing loans. These loans’ goal is to promote homeownership by providing affordable housing mortgages to qualifying residents. 

Fannie Mae Mortgage Loans

Fannie Mae buys mortgages from lenders to provide affordable mortgage financing to buyers. By guaranteeing and issuing mortgage-related securities, they help capital flow through the housing market. The conventional agency loans that BayCoast Mortgage Company offers follow Fannie Mae loans’ guidelines. 

Freddie Mac Mortgage Loans

Similar to Fannie Mae, Freddie Mac buys mortgages and then combines them with other loan types. After Freddie Mac combines the loans, they then sell them on the secondary mortgage market to investors. These loans help to extend homeownership to low and moderate-income borrowers and increase credit flow into various sections of the economy.

FHA Mortgage Loans

The Federal Housing Administration (FHA) helps mortgage companies and homebuyers by insuring loans for qualifying home buyers. These FHA loans come with low down payments and flexible guidelines to make homeownership a reality for many Americans.

VA Mortgage Loans

The Department of Veterans Affairs (VA) aims to help eligible surviving spouses, veterans, and service members become homeowners. VA loans come with no down payments required, low fixed rates or adjustable rates, and a flexible debt to income ratio. Qualifying individuals can use these loans to retain, adapt, repair, or buy homes for personal occupancy.

USDA Mortgage Loans

The United States Department of Agriculture (USDA) offers government-guaranteed loans to eligible suburban and rural homebuyers. USDA loans feature below-market interest rates, no down payments, and lower mortgage insurance premiums.

Other Types of Mortgage Loans

You can find several types of loans that don’t fall under government programs or the more conventional options. If you’re still looking for the right loans for you, review some other popular loans options available today:

Home Equity Loans 

Due to BayCoast Bank’s affiliation with BayCoast Mortgage Company, we can finance home equity loans. These loans give homeowners the chance to borrow against their home’s equity to help them pay for larger expenses, such as renovations. Via our home equity line of credit, our home equity loans come with special low rates.

Construction Loans

When you want to build a home, construction loans can help you finance it. These loans feature 31-year terms, with the first year’s loan only requiring buyers to pay for the interest related to the disbursed funds. Construction loans originate from BayCoast Mortgage Company, and BayCoast Bank services them. 

Blanket Loans

If you’re looking for a new home and don’t want to wait to sell your current one, a blanket loan is an ideal option. These loans allow you to leverage your equity to increase your purchase power and appear like you’re a cash buyer. With one of these loans, you won’t have any financing contingencies, allowing you to make an offer that stands out.

Land Loans

Land loans are exceptional options for a buyer hoping to buy land and build a home on it. You can find land loans with payments dispersed over a 20-year term and fixed interest rate for the first five years, with the rates adjusting every year after. 

Bridge Loans

Bridge loans provide homebuyers with immediate cash flow between the time of cash demand and availability. Since these loans give homebuyers a source of cash flow, they allow buyers to buy a new home and sell another one at the same time.

How to Choose the Best Mortgage Loan

With all of the options available, you might still be wondering about which one is right for you. As you try to pick the right mortgage option, begin by assessing your current needs and situation. During this assessment,  you can review a potential home’s cost, your financial position, and your plan for the future. 

After this assessment, you’ll likely have narrowed down the types of loans you might be interested in. For example, a government program loan might be perfect for you if you qualify, or you might prefer a conventional fixed-rate loan. Since you’ll have narrowed down the type of loan you’ll be looking to purchase, you can review the loan terms and interest rate types available. 

Before you select a loan, you’ll want to make sure you understand the various costs and fees associated with it.  For instance, you might use a mass housing mortgage calculator to better understand a mass housing loan’s terms. After using a home financing calculator and reviewing the various financing requirements, you’ll likely have found the right mortgage option for your new home.

Choose BayCoast Bank for Mortgage Loans in Massachusetts and Rhode Island

At BayCoast Bank, we can help you find the best 15-year and 30-year mortgage rates in Massachusetts and Rhode Island. Due to our affiliation with BayCoast Mortgage Company, we regularly help homebuyers find the best loans and current mortgage rates in RI and MA for their needs. Since we can finance all of the previously mentioned loans, we can make affordable homeownership a reality for you. 

If you’re still wondering what mortgage option is best, review our latest mortgage tips or contact us to speak with a representative who can help you decide.

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