Financing is always a big question mark when searching homes for sale, especially for first time buyers who may not realize that all loans are not created equal; and all lenders do not offer every type of loan that is available.
Getting Started With A Mortgage
Getting the right loan could make a lot of difference in a lot of ways including the down, the number of years on the loan, closing costs and mortgage insurance.
Getting approved for the right type of loan could save a first time home buyer thousands of dollars and free up money that can then be invested in home improvements or new furniture.
FHA loans are insured and require borrowers to have mortgage insurance. The security that the mortgage insurance provides allows lenders to offer FHA loans at with attractive interest rates and more flexible qualification requirements.
FHA loans offer both fixed-rate mortgages and adjustable-rate mortgages.
An adjustable-rate mortgage is a loan with a variable interest rate that can change throughout the life of the loan. It differs from a fixed-rate mortgage, as the rate may move both up or down.
A fixed-rate mortgage is the most common mortgage available. As the name suggests, the interest rate on a fixed mortgage does not change during the entire duration of the loan.
Veterans Affairs (VA) Loans
Many veterans have taken advantage of VA loans to purchase their first home. One big advantage is they do not always require a down payment. Loans are made through private lenders and guaranteed by the Department of Veterans Affairs.
There is no minimum credit score, however, lenders generally have their own requirements and most will expect a credit score of 620 or higher. Some may go lower, but will most likely charge a higher interest rate.
The guidelines are usually more flexible than conventional loans. VA loans are only to finance a primary home. A VA loan cannot be used to purchase or refinance vacation and investment homes.
Do Your Homework Before Deciding
As a first time buyer, it is important to understand all of the various loans and programs that are available as well as how mortgages rates work and fluctuate.
A quote for a loan only lasts for a period of time so be sure you are ready when the opportunity for that dream home arises. Contact a local Realtor today who can help you through the process.