A Better Alternative to Conventional Mortgage Loan

If you are someone who plans to buy a new house but is not equipped with the necessary financial resources to bring such dream into reality, you definitely have a number of options that can be considered. Among others, one thing that can be done is to take out a mortgage loan. With this, you will be able to enjoy a repayment scheme that is convenient for you, and in accordance with your financial situation. This will make owning a house not too heavy, especially financially, since there is a pre-determined repayment period, and you do not have to put out a large sum of cash all at once.

If you plan to apply for a loan for your house, you can basically choose from a conventional mortgage loan or from a loan that is applied through the Federal Housing Authority. The difference in this case lies on the insurance of the loan that is applied. In a conventional loan, the mortgage is not guaranteed by the government. This means that once you fail to pay for the amount that is owed from the mortgage, the broker or the lender could not go after the government, since no insurance has been extended. If you are going to apply for this type of loan, you should have a considerable amount of money, since it typically requires a larger down payment. More so, you also have to make sure that your credit score is acceptable, as it is one of the most significant factors that will determine approval.

A better alternative to a conventional mortgage loan would be applying for a government loan, or basically a loan that is being guaranteed by the government. One of the major benefits of this type of loan is that you can get approval faster, since the broker is guaranteed that no matter what happens to you, the government will have the responsibility to cover for your loan.
Aside from being faster, another good thing about a government loan for owning your house is that it requires a very little amount of down payment. It can be as low as 3.5%. Although mortgage insurance will be required, it is still cheaper compared to a conventional loan, making it a better option if you do not have a lot of money to give for down payment.

Mortgage loan that is guaranteed by the government has been popular on the past, and it has been credited for its ability to help many people have their own house, in a manner that is affordable for them. More so, apart from home owners, it is also said to have helped the real estate industry. As housing becomes more affordable, the businesses within the real estate sector realize an increase in their sales, and overall, an improvement in the industry after its tremendous turndown.

In sum, if you plan to have your own house, you can opt for a mortgage loan through the government. The reasons stated earlier are enough to prove that it is a better choice rather than opting for a conventional mortgage loan.