A No-Nonsense Guide to the Different Types of Mortgages (Part Five)
In part four of our “Different Types of Mortgages” series, we talked about home loans for refinancing, and home equity loan products. Here are a few more types of mortgages on the market.
Other Kinds of Mortgages
In addition to the types of mortgages we’ve discussed above, there are other less common mortgages available to specific types of borrowers.
Doctor Mortgage Loans
A few decades ago, lenders realized that young doctors were an incredible, untapped market for home loans.
While young doctors typically have good credit and have huge future earning potential, they often have little savings, mediocre salaries, and tons of medical debt. For these reasons, they often get rejected from traditional mortgage applications. So, banks decided to give them their very own type of mortgage: the doctor loan.
Doctor loans typically:
- Require very little money down (10% or less in many cases).
- Don’t require private mortgage insurance (PMI).
- May allow a contract as documentation of future earnings.
- Can often allow borrowers to lock in the same rate on a conforming or jumbo mortgage.
Doctor mortgage loans were originally designed for medical professionals. However, in recent years, many lenders have opened these up to dentists, podiatrists, and even attorneys. If you’re in an approved profession and can demonstrate a high likelihood of making more money in the future, you have a decent chance of getting approved for one of these loans.
Energy Efficient Mortgages
Energy efficient mortgages help homebuyers finance energy-efficient home improvements. These mortgages are relatively new (and have grown more popular in recent years) Energy efficient home loan options are offered by the FHA and the VA, and also by private lenders.
Here are a few examples of what you can finance with one of these loans:
Heat pumps. These can extract heat from either the ground or air in order to help heat a home.
Furnace replacement. Outdated furnaces may need to be modified or replaced in order to increase a home’s energy efficiency.
Solar heating and cooling systems. These systems can help reduce your home’s energy use, and can also be used to heat pools.
Clock thermostats. These allow you to set your temperature to different levels during different times of the day, so you don’t pay to heat or cool an empty home.
No Matter The Mortgage, It Pays to Stay Informed
Whether you’re a young doctor buying your first home or a veteran buying looking to purchase your third home, having good information is key when it comes to getting the most out of the mortgage process.
The more you know, the more you can effectively save money, shop smarter, and avoid costly mistakes that could come between you and your dream home. So, keep reading, keep studying, and get excited. With so much information out there, there’s never been a better time to own a home!