Hard Money Loan
Like a traditional loan, a hard money loan is a secured loan. They are guaranteed by the property it is being used to purchase, so if a person defaults on that loan the lender can take over the ownership of the asset to recoup its losses.
The benefit to this type of loan is the timeline for securing it, you may be able to close on a hard money loan in just a few days which is one of the reasons is it very popular among people choosing to flip houses.
Federal Housing Administration (FHA) Mortgage Insurance Program
FHA Loans are insured by the Federal Housing Administration, a government agency within the Department of Housing and Urban Development.
With an FHA Loan you will pay for mortgage insurance, which protects the lenders should you default on the loan.The insurance will unfortunately increase the size of your monthly payments, and the lender must be FHA Approved.
A Common misconception about FHA loans is that only first-time home buyers are eligible, but in fact most people are. These types of loans are popular because they require a small down payment, as little as 3.5% of the home price. Borrowers must have at least a 500 credit score to qualify.
Fixed Rate Mortgage Loan
For this type of loan you are able to lock in your mortgage interest rate for the full repayment term. What this means is that your payment will never change through the course of your financing – this also applies to long-term financing as well.
Adjustable Rate Mortgage Loan
With Adjustable-rate Mortgage loans your rate will fluctuate – going both up and down depending on market interest rates. In addition to this there is a hybrid option, where the loan has a fixed rate for a specific amount of time and then adjusts annually. An example of this would be the 5/1 ARM which has a 5-year fixed rate, and then after 5 years adjusts each year.
Conventional Loans are not backed by the government. These are ideal for people with good or excellent credit scores & a good debt-to-income ratio.