It is never too early to sit down with a lender. We always recommend doing this as early as possible. We wouldn’t want you to fall in love with a property you can’t afford or doesn’t fit your loan requirements. Our team would be happy to point you in the direction of some local lenders to help you start the process.
The best place to start is deciding what type of loan is right for you. It is a common myth that you need 20% down to afford a home, that is not the case!
Conventional loans can be either fixed or adjustable rates. Their guidelines typically call for a minimum credit score, certain income requirements and a down payment starting as low as 3%.
The fixed-rate mortgage is the most popular mortgage program in use today. Fixed-rate loans offer the borrow a fixed interest rate for the life of the loan, typically 15 to 30 years. Borrowers have peace of mind knowing that their monthly payment will not change over time. Conventional fixed-rate mortgages have underwriting requirements established by Freddie Mac and Fannie Mae, and require certain down-payment and debt-to-equity ratios to qualify. Fixed-rate loans are especially attractive to buyers who plan to stay in their home for more than a few years.
Adjustable Rate Loans
With an Adjustable Rate Mortgage (ARM), the interest rate changes periodically, and payments go up or down accordingly. Rates are tied to an index that reflects the cost of money at any given point in time. Generally speaking, lenders charge a lower initial interest rate for the ARM than for the fixed rate mortgage. If you are expecting interest rates to decrease in the future, or if you are trying to maximize your purchase power today knowing your income will rise in the future, then this loan may be right for you. Adjustable rate loans are attractive for buyers who expect to be in the home for a short period of time.
FHA and VA Loans
The Federal Housing Administration (FHA) offers loans for low-to-moderate-income home buyers. FHA loans have lower down payments, and have relatively easier requirements than conventional fixed-rate mortgages. FHA mortgages have no income restrictions and even those with lower credit scores may be considered. Past bankruptcy does not necessarily disqualify borrowers from using this program!
In addition, the Department of Veterans Affairs (VA) offers a zero-down mortgage program. To take advantage of this program, borrowers need to be among those listed as veterans and service personnel in the U.S. military. One of the biggest benefits of this program is that it eliminates the need for private mortgage insurance!
USDA loans are mortgages backed by the U.S. Department of Agriculture. They are available to home buyers with low-to-average income for their area, offer 100% financing with reduced mortgage premiums and feature below-market mortgage rates. USDA loans are available for suburban and rural properties. Check with a local lender to see if a property qualifies.
Jumbo loans is a mortgage that allows financing above the maximum amount established by Fannie Mae & Freddie Mac.
Call us today to help answer all your financial questions and to connect you with a local lender!