What Mortgage is Best for you?

Are you planning a new home this Spring? This is a very exciting time, but can also be stressful. I am always meeting with different mortgage companies as to what they have to offer my buyers depending on their situation. Buying a home is a very unique process to you, because some of you may have a lower credit score, may need to sell your home to buy a new one, have a low amount available for a downpayment, lower income, etc. If you’ve been wanting a new place but don’t think you can… more than likely you truly can buy a home! You just need to best loan type to work towards your needs.

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Here are some of the mortgages available… see what’s best for you and your family

Conventional Loan- Best for the person with a credit score above 620. This loan is perfect if you have a 20% downpayment, with 20% down you will be able to avoid paying PMI (Private Mortgage Insurance)- an additional fee charge by the bank with less than 20% down. Even without 20% down, with a good credit score most banks and mortgage companies can also use this loan for you with as little as 3% down, If you plan to stay in your home for 5-10 years a conventional loan may be your best route.

FHA Loan- This is best for people with a lower credit score under 620 to approximately 580… though some mortgage lenders can do this lower than 580, depending on your situation. You can also use this loan if you have a lower down payment, usually requires are 3.5% down. This loan is ideal for the person with a lower credit score and a small downpayment. Keep in mind during the appraisal process of the home, the appraiser will make sure the home is safe for them to insure. The home must be free of safety hazards and chipping paint if it was built before 1978. For example, if the home has chipping paint, missing staircase railings, loose electrical work, this will be required to be repaired prior to closing.

VA Loan- Have you served our country as a veteran? This loan will be best for you! A Veterans Affairs loan is a guaranteed loan to help returning Veterans purchase homes without needing a downpayment or excellent credit. There are no private mortgage insurance requirements, & lower closing costs, which will help you save money upfront. This loan also has more income and credit flexibility which helps borrowers qualify a lot easier. The VA loan will also have the same housing requirements as the FHA loan as in it must be free of safety hazards and chipping paint if built before 1978.

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USDA Loan- The USDA loans purpose is to provide affordable homeownership to stimulate economic growth in rural and suburban communities. Some benefits are a 0 downpayment, lower private mortgage insurance, and flexible with credit scores. This home will also need to be free of safety concerns, and chipping paint if built before 1978. Only certain areas will work with a USDA loan, it is up to 97% of the United States, but around our area, the homes that will qualify will most times need to be west of interstate 43. This type of loan is great for the borrower that doesn’t have a downpayment, has a lower income, and wants to live in a rural area.

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Home Equity Loan- Im throwing this one in there because it is the best way for someone to buy a new home and sell their current home later. During this competitive market, a lot of sellers will not accept an offer contingent on your current home needing to sell. So your best way about this is to take the equity out of your home as a downpayment or to pay in full on your new home purchase. This usually works best if your home is paid off, and you are downsizing, but can also work in a lot of other scenarios.  The bank will appraise your current home and give you a loan based on 80% or less of its value- Usually whatever you need, even if its 20% for a new down payment. But you will have to be approved for this as well as any other mortgage loan.

All of these loans will be based off your current credit worthiness… so my advice to you would be, know your credit score, save as much money as you can, pay down your debt & don’t make any large purchases while your searching! You WILL be able to afford a home! These are just the main types of mortgages available as well… before looking for your new home, always sit down with a mortgage lender and get pre approved! Make sure that person is working their hardest to give you the loan best to your circumstances.

I also have about a dozen of amazing lenders I work with… that I would be happy to refer you to. Then… when you’re ready… we can go find your dream home! 🙂

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As always in here to help, thanks for reading 🙂

 

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