Home Mortgage: Types of Mortgages

A Home Buying Article Contributed by Pravin Chatterjee

Home Mortgage: Types of Mortgages

Before going for home mortgage, there are a few technicalities that need to be understood. First and foremost of the technicalities is the types of home mortgage available in the market.

Basically there are three types of home mortgage available in the market. These are:

1. Conventional

2. FHA

3. VA

All the above-mentioned types of home mortgage are based on the person's status and occupation.

Conventional Home Mortgage

Conventional home mortgage is normal home mortgage where one can take the loan with a normal 20% initial deposit. After that, the remaining 80% of the total loan amount is to be submitted in a predefined span of minimum of 180 months i.e. 15 years to maximum of 360 months i.e. 30 years.

In conventional type, the mortgagor is not bound to take any mortgage insurance until and unless the down payment is less than 80%. In such a case,the mortgagor is required to take the Private Mortgage Insurance which the mortgage company is secured from the point of investment because in case if the mortgagor defaults to pay the loan then the insurance company pays it. In conventional home mortgage there might exist prepayment penalty if paid before a specific period of time.

Fha Home Mortgage

In US, FHA(Federal Housing Association) is a federal body which facilitates the home mortgages for those who are unable to arrange for the initial payment to be submitted as the down payment for the home mortgage.

These mortgages are with the clause of mortgage insurance wherein the the clause suggests that in case the mortgagor defaults in paying off the mortgage, in that case the insurance premium paid every month along with the mortgage payment will be used to payoff the mortgage. This is called Mortgage insurance premium and it is a mandatory feature for a FHA home mortgage. There will not be any pre payment penalty as the mortgage amount can be paid in full any time.

Va Home Mortgage

The VA(Veterans Association) is another federal body which helps to provide home mortgages to the War Veterans. This body helps getting mortgages to not only serving but also to the retired war veterans. In VA mortgages, the 'mortgage insurance' is not a mandatory feature.

Apart from the above mentioned home mortgages, there is an organization named NACA (Neighbor Hood assistance corporation of America) that also helps in getting home mortgages to people with low and moderate income. The mortgagor has to pay a nominal amount of $50 per month as fee to NACA along with his monthly mortgage payment irrespective of the mortgage amount.

All leading banks or mortgage companies are working in close association with these federal bodies. They all are working to get every person a home of his own. The only step one has to take is to start thinking of getting a home and then look for the best option of Home mortgage solution to get a home of his own.