When you’ve decided that you are ready for homeownership, whether for a job or to be closer to your family, you will have to consider taking out a home loan.
There are many types of home loans, some of which are best-suited to first-time buyers, others which are suited to buyers with low credit, and others still which are best for families with relatively stable incomes.
Before you begin looking into a home loan, you will want to make some thorough preparations. You should take stock of your credit and work to improve it if necessary, you should consider any debts you already owe in relation to what you regularly earn, you should figure out what you will be able to afford, and you should consider speaking with a lender who can help you get organized. Once you have your current finances in order, it is time to consider what home loan options are available to you.
Types of Home Loan
The conventional fixed-rate mortgage, as it sounds, has a fixed interest rate for the duration of the mortgage. The primary reason to consider a fixed-rate mortgage for your home loan is if you intend to remain in your home for a long time. The fixed-rate is also worth considering if interest rates are especially low at the time of purchase so that if they rise, you’ll still be paying at a lower rate.
An FHA loan is a loan insured by the Federal Housing Administration. These loans are intended to encourage people with low credit or high debt-to-income ratios to become homeowners. Because the lender is insured with the FHA, they assume much less risk. If a borrower defaults, the lender will receive reimbursement from the FHA. There are some caveats to this kind of loan, though: borrowers must pay for mortgage insurance, and their interest rate will depend on their credit rating.
A USDA loan is similar to an FHA in that the loan will be sponsored by a government agency. Unlike the FHA, however, the USDA loan actually requires no down payment. This great benefit comes with a downside, though, because only houses in USDA eligible areas qualify for this type of loan. However, barring major metropolitan areas, many smaller cities and towns are still eligible. For more information on USDA loan requirements, speak with a mortgage lender.
VA loans are guaranteed by the U.S. Department of Veterans Affairs. Much like the FHA and USDA loans, the VA loan is not lent by the agency itself. These loans are available to veterans and current service members. Like the USDA loan, the VA does not require a down payment. And, unlike the FHA loan, the VA does not require mortgage insurance.
Choose David Jacobson for your Home Loan
I make it my job to ensure that your home loan experience is as simple as possible. With over 25 years of experience in residential real estate management in the area of Southwest Missouri, you can be assured that I’ve honed my expertise. Don’t let the fluctuations of the housing market discourage you from achieving your dreams of owning a home. Contact me today to get started on your home loan.