Interested in home loan plans?
Here is what you need to know about mortgages.
Before buying a house, you need to know your way around mortgages and the options available to you. Talk to your mortgage broker at Elite Mortgage Source and discuss home loan plans. Before that, here are a few details you should know:
Conventional Mortgages
The federal government doesn’t insure these home loans. There are two options available in conventional mortgages; conforming and non-conforming.
A conforming loan means that that the amount of the loan falls within the limits set by the Federal Housing Finance Agency. Mortgage loans that don’t meet these limits are called non-conforming loans.
These can be used for an investment property, a private home, or even a second home. Even though interest rates are slightly higher than other types of mortgages, overall borrowing cost is lower. However, you do need a minimum FICO score of 620 or higher.
These are perfect if you have a strong credit history, employment history, stable income, and enough to make a down payment of a minimum of 3 percent.
Government-Insured Mortgages
The US government doesn’t lend money directly but it does ensure more Americans are able to afford homes. There are the Federal Housing Administration loans (FHA), the US Department of Agriculture loans (USDA), and the US Department of Veterans Affairs loans (VA).
FHA loans allow individuals who haven’t saved a lot for a down payment or who don’t have a flawless credit score to own a house. With a 580 FICO score, you can get up to 96.5% of financing and just a 3.5% down payment. With a higher down payment, you could get financing for a lower FICO score.
With USDA loans you can buy a house in a rural area even if you have moderate to low income. You might not even need a down payment if you meet certain requirements.
VA loans are specifically for Veterans and their families and you can avail them with low interest rates. They do not require down payments or mortgage insurance and are the most flexible out of the lot.
Adjustable-Rate Mortgages
In adjustable rate mortgages, the payments can vary due to fluctuating interest rates. There is usually a lower interest rate in the initial years of the loan so you are able to save a significant amount on the interest payments.
Jumbo Mortgages
These are non-conforming conventional mortgages, so the price of the house could exceed the maximum limits set by the federal government. These are common for houses in high-cost areas and require detailed documentation to qualify. The interest rates are competitive with other conventional loans. Depending on the lender, you would need a credit score of at least 660-700 and a down payment of a minimum of 10-20 percent.
Fixed-Rate Mortgages
These have the same interest over the lifespan of your loan, so there would be no variance in your monthly payments and you can plan your monthly budget better. These are usually for a life of 15, 20, or even 30 years.
Discuss Your Case
Every case is different and there isn’t a one-size-fits-all solution. Discuss your case with our residential mortgage broker at Elite Mortgage Source and start the journey of owning your home.
