Blog

Loan Options

  |   Business   |   No comment

Buying a home is the single largest financial transaction that most people ever do in their lifetime. As a first time home buyer that can be very over whelming. There can be many fears that a buyer goes through when deciding to buy their first home. One is whether you will have enough money for the down payment and or the closing costs. It is very important to speak with a mortgage specialist and get pre-approved before you actually go out to look at houses. Most sellers will not accept an offer from a potential buyer that has not been pre-approved first!


Your mortgage specialist can walk you through all of the different loan options and talk to you about what the out of pocket expenses will be. There are some loan options that do not require a down payment. One would be a VA loan. This is for any person that is an eligible veteran. The other option would be for a USDA loan. This loan assists low to moderate income rural homebuyers achieve their dream of homeownership!

(http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do). This loan is not eligible in Duval County but there are many other counties that are eligible in the surrounding areas of Jacksonville.
The lowest down payment option would be with an FHA loan. (Often thought of as the first time buyer program) This loan program also has lower credit score requirements than the conventional loan options. The minimum down payment required for this loan is 3.5% of the purchase price. It is a great option for the buyer that does not qualify for the USDA and the VA loan programs and has a small down payment. The FHA program will also allow the buyer to get a gift from a family member for their down payment money. 


Finally the conventional loan option is for the buyer that has a higher credit score and a little more money to put down. The minimum down payment required for the conventional loan is 5%.  The 5% down payment must be the buyers own funds. They must show a bank statement for the last 2 months with the money in their account in order to prove it is that the funds were not gifted to them.
Working with a good realtor to key to making sure you negotiate the lowest purchase price and as much, if not all, of the typical buyer closing cost paid for you by the seller.

Happy House Hunting! 

Team #MBL

 

 

CONVENTIONAL
A conventional loan is one that is not insured or backed by the federal government. This distinguishes it from other types of home loans that are insured by the government in some way, such as USDA, VA and FHA loans (described below).Conventional home loans might be insured by a private mortgage insurance (PMI) company. But they are not insured by the government. Qualification standards are typically stricter for conventional loans, when compared to government-backed financing. The minimum credit score requirements are 640 or better. Typically this loan offers the best interest rates when the buyer has a 20% down payment. However, the minimum down payment required is 5% of the purchase price. When a buyer puts down less than 20% they will be required to pay a monthly mortgage insurance premium (otherwise known as PMI) until they have reached a 78% loan to value ratio.

FHA 
Federal Housing Administration loans are backed by the federal government and administered by participating lenders. The point of FHA-insured loans is to make homeownership more accessible through lower down payments and closing costs along with more flexible credit requirements. The minimum down payment is 3.5% of the purchase price. Potential buyers can qualify for this mortgage with credit scores as 580.
This loan does require the buyer to pay an upfront mortgage insurance premium which may be rolled back on top of the loan amount. There is also a monthly Mortgage insurance premium (otherwise known as PMI) that is collected monthly for the life of the loan.

VA
The U.S. Department of Veterans Affairs (VA) offers a loan program to military service members and their families only. Similar to the FHA program, these types of mortgages are guaranteed by the federal government. The primary advantage of this program is there is NO DOWN PAYMENT required. The credit score requirements are similar to the FHA loan program. The VA buyer will need a minimum credit score of 580 or better to qualify.


USDA
USDA is officially known as the USDA Rural Development Single-Family Housing Guaranteed Loan Program. This loan also provides 100% financing for qualified borrowers who meet credit and income requirements. This type of mortgage is only offered to low- and moderate-income borrowers in designated rural areas. They are also referred to as rural housing loans, or Section 502 mortgage loans. This loan requires a minimum credit score of 640 or better.
You can learn more about this program on the USDA website:
http://www.rurdev.usda.gov/HSF-About_Guaranteed_Loans.html




No Comments

Post A Comment