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Home loan financing is a powerful means of purchasing a home. Having a mortgage loan from a financial institution or other lending company typically enables you to purchase and own your home without requiring a large down payment.

The most common type of home loan financing is for an owner-occupied primary residence with no second liens against the property. An exception to this rule is a construction loan for a new house, which can include an additional lien on the lot and/or a home equity line of credit, also known as a HELOC. There are other types of loans for investment properties or second homes that can include additional lien holders.

Another type of home loan financing is called a fixed-rate mortgage, which means that your interest rate and monthly payment will remain the same throughout the life of the loan. Your monthly payment amount will never increase unless you are refinancing to get a lower interest rate, or because of an unfortunate circumstance called “prepayment.”

If you have sufficient equity in the home when it is time for your loan to be paid off, you may be able to refinance your loan to get a better interest rate. If you don’t have enough equity to refinance, or if you find yourself “upside down” on your home loan (the value of your home is less than the amount still owed on the mortgage), then you may be able to obtain a HELOC.

A final type of home loan financing option is for borrowers who are unable to accumulate the required 20 percent down payment required to purchase a home. Federal programs such as FHA loans down payment assistance program can enable these borrowers to become homeowners who might otherwise not be able to qualify for the loan amount they need.

It is important that you shop around when looking into all of your home loan financing options, just like any other major purchase you make.