One of the most important pieces to buying or selling a home is securing financing, most commonly known as a mortgage. There are several different types of mortgage options to choose from and, at times, it can get overwhelming to keep track of all the terms and conditions that come with each one. It can especially seems daunting choosing which loan will be your best option.
Conventional Loan: A conventional loan is the most common choice among homebuyers who have good credit and have the ability to put more money down for a down payment. The minimum amount homebuyers can put down is 5%. One of the most appealing perks of this particular loan is the ability to remove mortgage insurance from the policy after a certain point. Mortgage insurance is required for every loan as assurance to the bank that the money loaned will be eventually paid back. With conventional loans, after the homebuyer has paid at least 20% of the loan back, mortgage insurance can be removed. That’s one less thing you have to pay each month!
In order to qualify for this loan, you will need a strong credit score and secure annual income.
Federal Housing Administration Loan: For those who are looking to purchase a home with the ability to put little money down, FHA loans may be the best option for you. FHA mortgages allow buyers to purchase a home with as little as a 3.5% down payment. Homebuyers have the ability to negotiate seller concessions, which can help buyers receive funds that can be used towards closing costs and other final costs. It’s important to make sure that you choose a realtor that is great at negotiating on your behalf because there’s definitely money to be saved!
Qualifying for this type of loan comes a little easier for buyers, especially those with lower credit scores. There is no opportunity to remove mortgage insurance from this loan agreement.
Veterans Administration Loan: Only retired service members or active duty members are qualified to apply for this specific type of loan. One of the best reasons veterans choose this type of loan is that they can finance 100% of the home’s value through the bank. VA loans offer the best interest rates, and again, allow the opportunity for negotiating closing costs, something our team is highly skilled in.
Are you a veteran or active duty member? This a great mortgage option for you!
USDA loan: The least of the loans we recommend for our homebuyers is a USDA loan. USDA loans are the most affordable loan option for those outside the military. These loans, however, have specific stipulations of use. USAD loans can only be applied to homes in eligible rural areas. In other words, the loan is only available for homes located outside of city limits. This allows qualified buyers to obtain 100% financing on a home, as well.
Still unsure about which loan is right for you? We’ll be happy to put you in contact with some of our amazing lenders who will be able to answer any specific questions you may have. Contact us today!