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When it Comes to Different Types of Home Loans, Where Do I Start?

03/16/2020 - Borrowing, Home Buying

Mortgage options

If you’re in the market for your first home, you may also be in the market for a mortgage. Unfortunately, deciphering different types of mortgage loans isn’t as fun as daydreaming while surfing real estate sites. Choosing the structure of your mortgage is a long-term decision that will affect your finances well into the future—15 to 30 years to be exact. Feeling overwhelmed? We get it. We’ll make sure you find the right mortgage option to finance your dream home. As you determine how much home you can afford and start saving for a down payment and other upfront costs, it’s also a good time to start looking at different mortgages.

Types of Mortgage Loans

One of the first things to consider as you compare different types of home loans is how long you plan to stay in the home and how large a monthly payment your budget can afford. Conventional mortgages are available in 15- and 30-year terms. If you can afford a larger payment over a shorter period of time, you may want to opt for a 15-year loan. But it’s not always about paying off a mortgage as quickly as possible. Found a forever home? If your roots are planted in one place for the foreseeable future, consider a 30-year loan. But your choices don’t stop there! WesBanco offers different mortgages for homebuyers who are building or buying land, have specific occupations, have completed military service, have special financial circumstances and more.

Let’s start off easy though, with a dive into the difference between fixed-rate and adjustable-rate mortgages.

Fixed-Rate Mortgages

Fixed-rate mortgages range from 15 to 30 years depending on your needs and offer peace of mind through consistent monthly payment amounts over the life of the loan.

Once you opt for a fixed-rate mortgage, how do you decide between a 15- or 30-year term? If you choose a 30-year mortgage, you may have lower payments because the total cost is extended over a longer period of time. However, if you have flexibility in your monthly budget this may also allow you to qualify for a larger loan – the higher monthly payments going toward more home over the same time. If you choose to go with a 15-year loan term, the payments will be higher (than a 30-year term of the same amount), but you’ll pay off the loan faster and build equity quicker.

A fixed-rate mortgage is probably the right decision if you can are looking for payment stability and plan to stay in your new home for more than 10 years. When it comes to types of home loans, fixed- rate mortgages are usually the easiest to understand.

Adjustable-Rate Mortgages

Adjustable-rate mortgages have a bit more flexibility built in – their monthly interest rate adjusts based on market trends. This is the most obvious difference between them and their fixed-rate counterparts. It also means they generally have a lower starting rate than fixed-rate mortgages, which can make them more appealing initially. Adjustable-rate borrowers just need to be ready for more twists and turns along the way.

Adjustable-rate mortgages have an interest rate that is guaranteed for a predetermined period of time. After that amount of time, the interest rate adjusts with market trends, which means you may be paying more or less than your initial rate. The initial term can vary depending on the program you choose, which could range from 3-15 years. According to My Fico, adjustable-rate mortgages generally follow this trend: the shorter the loan term, the lower the initial rate.

These types of mortgage loans are great for people who know they may be able to pay off the loan or relocate before the rate changes. If the lower initial term gives you the flexibility to pay more toward the principal each month – and reduce your total loan balance before the term is up – they can be a great benefit to savvy borrowers.

As with fixed-rate loans, adjustable-rate mortgages are available for 15- and 30-year terms. And although the payment may be lower in the short term, proactive budgeting is important, especially if your rate reaches its cap after the predetermined initial term has ended.

Different Mortgages for Different Circumstances

Remember when we said we offer mortgages for all walks of life? Here’s where those less-conventional mortgages come into play. Maybe you’re the CEO of the hottest startup in town and looking to invest in real estate. Maybe you’re a doctor who just finished med school. Maybe you want to build a custom home on family land. WesBanco offers a variety of different mortgages, including Physician Mortgage Loans and Construction-to-Permanent Loans to finance your dream home. Jumbo mortgages, or mortgages to purchase a home above $510,400, are also available and come in both fixed-rate and adjustable-rate payment options.

Whether you’re looking for a starter home or a seaside mansion in Maryland, there’s a lot to consider when shopping for a mortgage. But it doesn’t have to be confusing. Our various types of mortgages are available with flexible rate terms, varying down payment requirements and competitive interest rates. Our local loan officers are here to help everything make sense. What it all comes down to? Choose a mortgage loan that fits your personal lifestyle and budget, while saving room to make lasting memories in your new home.

Learn More about WesBanco’s Mortgage Options:

Mortgage Lending

Content is for informational purposes only and is not intended to provide legal or financial advice. The views and opinions expressed do not necessarily represent the views and opinions of WesBanco.

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