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A Conventional California home loan differs from those that are guaranteed or insured by the federal government such as FHA (Federal Housing Administration), VA (Veterans Administration) or the RHA (Rural Housing Service).

In the not so distant past the only type of home loan you could get was the familiar 30 year or 15 yr.  conventional loan.  Even today these are among the most commonly used loans for purchasing a home. There are several types of conventional loans. Perhaps the most common of these is the fixed rate mortgage.

With a fixed-rate mortgage, you get the loan at a certain interest-rate, which does not change over the life of the loan. The average fixed-rate home mortgage covers a 15 or 30 year span of time.

A fixed-rate mortgage has the advantage of enabling a homeowner to know every month what the payment will be because it doesn’t change. The monthly mortgage payment is figured out on a schedule and the homeowner pays the same mortgage payment, every month, for as long as they have the loan.

Another popular type of mortgage is the Adjustable Rate. Adjustable rate mortgages, or ARMs, became popular over the past two decades. Usage skyrocketed prior to the market crashing as more buyers  chose to jump in on the real estate boom.

Adjustable rate mortgages are attractive because the starting rate is low making monthly payments more manageable. However, after a certain period of time, such as seven years, the interest rate “changes.” More often than not the rate adjusts upward. Unfortunately, over the past few years this “adjustment,” was very painful as many home owners lost their jobs during the recession, making it nearly impossible for them to pay their adjusted mortgage when the rate changed. As a result, many people lost their homes.

In general, adjustable-rate mortgages are only a good idea if you plan to be in your home for five years or less. Otherwise, the fixed-rate mortgage is generally the better of the two mortgages.

Knowing the common options for conventional California Home Loans should make it easier for you to determine the best route to take. Make the American dream of Home ownership your reality.

Call Realtor Agata Grudzinski @ (850) 708-7724 for Property Details.