Follow Kevin Twitter Facebook
Email Kevin Email
Residential Real Estate
Sep 1, 2014

Mortgage Loans 101

Sponsored Content provided by Kevin McKoy - Broker, Network Real Estate

When it comes to closing on your new home, few things are more important than the mortgage loan you get. But all loans are not created equal, and we don’t just mean the price! At Network Real Estate, it’s our job to keep you informed at every step of the home buying process. To help you make sense of your investment, we’ve broken down the main types of mortgage loans on the market today. 

The first major division in home mortgage loans is fixed versus adjustable loans. In a fixed loan, the interest rate remains the same throughout the entire loan repayment. Although your interest rate itself depends on your credit and the local market, a fixed loan guarantees that your interest rate will never go up or down. Conversely, in an adjustable loan, the interest rate will change throughout the repayment period. Typically, the adjustable loan interest rate will be lower than average for the first year of repayment, and will then gradually rise. To many buyers, fixed-rate loans are seen as more attractive, but adjustable loans may have the benefit of better initial terms, and may be a good option for homeowners who only intend to own their home for a few years.

Whether you have a fixed or adjustable loan, you will also need to research whether conventional loans or government-insured loans are right for you. Simply put, conventional loans have no affiliation with the U.S. government. These loans tend to be more negotiable, as they don’t have to adhere strictly to the terms of a government organization, which is a pro if you have excellent credit, but could mean higher rates if you have below-average credit. Government-insured loans fall into several categories, such as FHA loans (loans backed by the Federal Housing Authority) or VA loans (loans backed by the Department of Veterans Affairs). FHA loans have a big advantage because they allow for buyers to make lower down payments, many for less than 5 percent of the purchase price. Many families and individuals in the greater Wilmington area also may be interested in VA Loans, which is a loan offered to military service members. This loan is backed by the U.S. Department of Veteran Affairs, and is highly beneficial for homebuyers because it does not require a down payment whatsoever. 

Another important division in mortgage loan types is whether a loan is conforming or jumbo. Which category a loan falls into depends on two very important corporations: Fannie Mae and Freddie Mac. If these names don’t sound familiar to you, Fannie and Freddie are government-affiliated corporations that purchase loans from lenders and sell them to Wall Street investors. Freddie and Fannie set limits on the maximum size they are willing to back, and loans that fall within these limits are called conforming loans. Loans that exceed those limitations are called jumbo loans. Jumbo loans are considered “high risk” and require a higher down payment and a higher interest rate. 

Network Real Estate has established relationships with local lenders, and we always ensure that our clients are working with a trustworthy lender. We value honesty and transparency at every step of the real estate process, and we can put you in touch with lenders who share our values. Now that you have the rundown of the major loan types available to you, contact Network Real Estate to begin the process of purchasing a home in Wilmington, N.C.

Kevin McKoy is a GRI-certified, licensed real estate broker at Network Real Estate, which has exclusively served a high volume of property sales and purchases in the greater Wilmington area for over 30 years. With three offices at College Road, Historic Downtown and Pleasure Island, Network’s brokers are widespread and well-versed in this marketplace, making Network a preferred Real Estate company for first-home buyers and beyond.

20489 networkrealestate insightsad final
Ico insights

INSIGHTS

SPONSORS' CONTENT
Christy2

Keeping the Roof On

Christy West - Roof Rescue of Wilmington LLC/Roof Maxx
20180514 104209 51418120638

'I Hate...'

Steve Adams - School of Learning Arts
Chris coudriet

Your Tax Dollars are Being Spent Wisely

Chris Coudriet - New Hanover County Government

Trending News

ILM Aims To Start Parking Study Next Month

Christina Haley O'Neal - Jun 21, 2019

Interest In Solar Brightens

Christina Haley O'Neal - Jun 21, 2019

Chen Puts Final Touches On Ramen Shop

Jenny Callison - Jun 21, 2019

Roof Products Firm Back On Top

Christina Haley O'Neal - Jun 21, 2019

Wilmington To Host Disaster Preparedness Conference On Cancer Treatment

Johanna Cano - Jun 21, 2019

In The Current Issue

Chen Puts Final Touches On Ramen Shop

Johnny Chen, the food entrepreneur who brought sushi to downtown Wilmington more than 15 years ago with his first Nikki’s restaurant, has ag...


Software Firm Codes For Growth

After growing PS Solutions in Pennsylvania, founder Wayne Hippo came to Wilmington with the goal of replicating the company’s growth in the...


Aquarium Named Among Nation's Best

The N.C. Aquarium at Fort Fisher is among the top 10 aquariums in the country, according to a USA Today poll. Voters ranked the state’s aqua...

Book On Business

The 2019 WilmingtonBiz: Book on Business is an annual publication showcasing the Wilmington region as a center of business.

Order Your Copy Today!


Galleries

Videos

2019 WilmingtonBiz Expo Keynote Lunch - CEO, nCino, Pierre Naude`
Transporting the Future - Power Breakfast 3.12.2019
Health Care Heroes 2018