Now Let’s Talk Mortgages – What Mortgage is Right for you?
You have made the decision to buy a new home, know your going to take out a home loan but have no clue where to start. The first step is to shop around for a Real Estate Agent (One with SunState Realty LLC, preferably!) that your are comfortable with and trust. Once you start working with an agent you will need to identify a Mortgage Lender, typically your agent can refer you to reputable Mortgage Lenders. The lender will guide you in determining your credit rating, how much you are able to spend based on your financial situation, and will assist you with an affordable loan program to fit your specific needs.
There are three common types of Home Loans, 1) Conventional, 2) FHA and 3) VA. Quick summary of each:
Conventional Loans: Is a home loan, not insured or guaranteed by the federal government in any way. The big advantage of conventional loans is that they often do not come with the amount of stipulations that government loans do, the rules and regulations tend to be less strict with conventional loans. The drawback, because these loans are not insured or guaranteed by the government it may be much harder to qualify for a conventional loan.
Then you have you have your “government” loan programs, FHA and VA……
FHA Loans: The Federal Housing Administration (FHA) mortgage insurance programs is managed by the Department of Housing and Urban Development (HUD), which is a department of the federal government. With FHA loans, the government insures the lender against losses that might result from borrower default. Advantage: This program allows you to make a down payment as low as 3.5% of the purchase price. Disadvantage: You will have to pay for mortgage insurance, which will increase the size of your monthly payments.
VA Loan Program: The Veterans Administration offers service members, veterans and surviving spouses a highly desired home “guarantee” program that helps qualifying individuals become homeowners. VA Home Loans are provided by private lenders, such as banks and mortgage companies but the VA guarantees a portion of the loan, enabling the lender to provide terms that are more favorable to the buyer. The primary attraction of this program (and it’s a big one) is that borrowers can receive 100% financing for the purchase of a home. That means no down payment whatsoever.
Now you have the basics on Home Loans. When you are ready to jump into the market be sure to discuss your financing thoughts and plans with your Real Estate Agent, as there may be additional loan options available.
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