Buying a home is often the largest purchase one will make in their lifetime. So we want to make sure we’re making the right decision every step of the way. One of the most important considerations is figuring out the right loan for you.
But before knocking on lenders’ doors and applying for a mortgage, ask yourself “How stable are you financially? How much can you shell out for a down payment? How much monthly can you allot for a mortgage? How is your employment situation?”
We don’t know for sure what happens in the next years to come but you will need to feel confident and secure about your future. Before you look around, it is best practice to talk to a lender and get pre-approved for you to know the loan amount you can afford. You can also try this calculator to help you gain clarity regarding the costs of homeownership.
Now let’s talk about your loan options. There are actually many types of home loans to choose from. See which one fits you and makes the most financial sense for you:
Most Common Mortgage Loans
- Conventional loans: This is the most common type of home loan. One can buy a home with as little as a 3% down payment, depending on your credit score.
- More financing options
- Good credit required
- Open to all occupancy types
- 10-30 year fixed terms
- High 95% Loan to Value
- FHA loans: Federal Housing Administration (FHA) loans make homeownership more attainable with a smaller down payment. You can pay a 3.5% down, compared to as low as a 5% down payment for conventional loans.
- Offers low payments
- Low credit score option
- Easier to qualify for
- 15-30 year fixed rate
- High 96.5% Loan to Value
- USDA loans: The U.S. Department of Agriculture offers this program that is designed for people who are looking into settling in rural communities. The beauty of this program is that it is 100% financing, meaning zero down payment is needed.
- Offers low payments
- Good credit score required
- Limited to homes in the rural areas
- Must be owner-occupied primary residences
- 30 year fixed rate
- Zero downpayment
- VA loans: Active-duty military, veterans, and qualified spouses can enjoy this perk. You can buy a home with 0% down if you qualify for a VA loan.
- Offers low payments
- Limited to eligible veterans, active duty service members and qualified spouses.
- No Mortgage Insurance
- 15-30 year fixed rate
- Zero downpayment
Image from Springfield Heights
There is so much more to a home purchase than picking the home you like most, moving in, and calling it a day. Don’t fret, we are here to help to get you prepared. Here are other essential steps when it comes to home purchase.
If you or anyone you know is interested in being qualified to purchase a home right now, please feel free to contact the agents at Broadpoint Properties.
