Whether you are looking into purchasing a home for the first time or you already own one and are thinking of moving house, or simply acquiring a second real estate property, you must be feeling quite confused on terms of funding choices. There is an enormous variety of loans to choose from and it can be hard to decide which one is the best option. As a matter of fact, there are 4 types of loans which might help you finance the home of your dreams. Read on for a brief guide on all seven available home loans.

Type # 1: Mortgage Loan

This is the most traditional and common of all home loan types and was probably the first one you thought of. This loan is a secured loan, you will purchase a home while pledging that very same property as a security for the lender. Usually, lending institutions require a down payment ranging from the 20% to the 10% of the value of the home. Some lenders might be willing to finance 100% of the purchase but it is not advisable to do so as you will not have any equity on your new home. This is generally a very long-term loan.

Type # 2: First Time Home Buyer Loan

This type of loans works more or less the mortgage loan, except for the fact that it has been especially designed for those who have not owned a house before and offer some benefits the regular mortgage loan does not. It is common for lenders offering this type of finance to be able to tailor the loan terms following the applicants desire and particular needs. The lender might limit the amount of money you will be able to obtain, but in exchange they require little to no down payment and offer subsidized interest rates. This loan is also considered to be very lengthy.

Type # 3: Construction Loan

So you have been home hunting for the past months and you have not found the one yet. I know how discouraging it can be. Well, if you have started toying with the idea of building your home from scratch, then a construction loan is the answer for your problems. This loan has 4 stages of funding and is not thought of to be a lengthy loan. The borrower will only pay interests while the construction is in progress and will pay the full amount of the loan once the construction is finished. If you are thinking of applying for a construction loan, bear in mind that it takes almost a decade for houses to appreciate to the value of the construction loan.

Type # 4: Home Equity Loan

You will only be able to use this type of loan if you already own a property. This is an excellent option as home equity loans are extremely versatile. Approval for this type of loan is a very fast and easy process. Also, the interest you pay on the loan is tax deductible! While taking a close look at your situation, you will find out that using the equity you have built on your first home to purchase a second one will be better and easier than applying for a separate home mortgage loan.