Getting a housing loan is one of the highlights of your life. People usually want to buy their dream house using their savings and by getting a mortgage with a longer duration. However, there are many types of banks and financial institutions offering housing loans. Most of them provide a wide range of information that you could find on a home loan site.
Even after the housing crisis, there are numerous banks offering loans at competitive rates. Some have mortgage plans for people with various credit scores, and others provide better payback terms. Knowing more about the multiple lenders could help you have a broader image and select the right housing loan for you.
Retail and Commercial Banks
These banks offer savings and checking accounts to their customers. In addition, they typically offer housing loans with variable or fixed rates. When buying a mortgage, you may choose the payback period that can extend up to 30 years. Retail and commercial banks usually deal with real estate loans in the primary market without backing from the Federal Housing Programs. A typical housing loan would require a 10% down payment and a higher credit score to be eligible for the whole amount.
People may also ask for a mortgage from investment banks. That is because these banks deal with the Federal Housing Subsidized Programs in the primary and secondary markets. In other words, investment banks are bolder in giving higher amounts of money and have better payment terms for a higher interest rate. Furthermore, many investment banks have developed retail branches to better influence people who want to have a competitive housing loan.
Credit unions are financial institutions founded by smaller communities or groups of people. Their members save money and borrow from it when they need to build or buy a new house. It’s a lot easier to get a housing loan from credit unions since eligibility criteria are much more manageable.
For example, all the decisions for a mortgage application are taken at a local level without getting forwarded to remote corporal offices. Most customers like to deal with credit unions since they offer a more personalized way of doing business. Not to mention that their interest rates are competitive, and they have moderate down payment requirements that are easy to fulfill even when you have a lower credit score.
If you are looking for experienced firms in housing loans, mortgage companies are a typical example. They offer residential or commercial property loans and usually mediate between bigger commercial banks and customers. Most of these companies also provide creative and out-of-the-box housing loan solutions. As a result, people with lower credit scores and limited ability to pay a significant down payment may still be eligible for a mortgage.
It’s interesting to know that most mortgage companies maintain internet sites, and it’s possible to complete a housing loan application entirely online. However, if customers prefer an in-person visit to the mortgage companies, such services are always available.
Savings And Loans Associations
People may also apply for a housing loan in savings and loans associations. They are financial institutions that resemble regular banks, specializing in housing loans. Many associations are made on a community base founded on residents’ savings and deposits. The Federal Government has encouraged the creation of such associations across the country. Most of them offer lower interest rates mortgages to working-class people who want to finance the purchase or construction of their homes.
These associations are also allowed to let their members maintain personal and checking accounts with them. However, they are mandated to give more than 65% of their assets to housing loans and only a small portion to other commercial loans. Therefore, being eligible for a housing loan in savings and loans associations is more straightforward than with retail banks.
No matter the type of bank you choose to apply for a housing loan, you need to understand your real expectations and financial capacities. In addition, every financial institution requires you to show them your credibility as a borrower. Finally, paying back your mortgage in the agreed period gives you more chances to find the right lender for your case.
All banks are insured with the Federal Deposit Insurance Corporation (FDIC), ensuring all deposits and savings. The subprime housing loans crisis of 2007 has created a necessity for stricter eligibility criteria for all customers who apply for a new mortgage. Getting a housing loan would require you to be trustworthy and serious about your needs.