When looking for a mortgage there are a few to consider- most people go with either a conventional mortgage, FHA loan or a VA loan. The following is a comparison of these three types of mortgage loans:
Conventional loans are perfect for borrowers that have good to excellent credit. This type of loan follows conservative guidelines for minimum down payments, debt to income ratio and credit scores.
The costs that are included in this type of loan are lender fees, third-party fees, down payments, mortgage insurance and points. This means at closing the borrower has to pay these fees. For a loan with less than 20% down, there may be annual mortgage insurance premiums. However, unlike FHA loans, these premiums are not for the life of the loan.
Conventional loans are good and easy if you meet the requirements listed above. There are fewer hurdles than the FHA loan or the VA loan and most likely will take a shorter time to be processed.
FHA mortgages usually have more flexible lending standards than a conventional mortgage. This type of loan is good for borrowers that will have a large amount of their salary going to mortgage payments. Also the FHA loan is for people with low credit scores and those that want smaller down payments.
The FHA insures the mortgages - it does not lend the money. They allow borrowers to spend up to 56 or 57 percent of their income on monthly debt obligations – like credit cards, car loans, student loans and of course home mortgage.
You can qualify for an FHA loan with a credit score of 580 and in some cases even lower. Each FHA mortgage has two mortgage insurance premiums. First there is an upfront premium of 1.75 percent of the loan amount and has to be paid at closing. Then, there is an annual premium that varies for the life of the loan.
The FHA mortgage can be a great option for people that have high debt-to income ratios and low credit scores
The U.S. Department of Veterans Affairs offers loans to active-duty military members; veterans and surviving spouses purchase homes, as well as reservists and National Guard members. This loan is partly guaranteed by the VA making it possible for lenders to offer special features.
There is no down payment required from qualified borrowers buying their primary residence. The VA does not lend money- however it guarantees loans made by private lenders. The VA can charge an upfront VA funding fee that can be rolled into the loan or paid by the seller. The VA allows a seller to pay closing cost however does not require it – so the buyer might have to pay closing costs.
VA borrowers can qualify for 100 percent financing. Veterans do not have to be first-time buyers and may reuse this benefit. There are limitations on the amount of liability the VA can assume – and that usually affects the amount you can borrow.
Bottom Line – Before borrowing money for a home loan it is advised you speak with a financial professional as well as your realtor.
Keep in mind that whether you are interested in buying a home or listing a home, a Realtor should represent you– this person is working for your benefit and will help you navigate through the buying or selling process. I have thirteen years in New Home Sales and fifteen years in General Real Estate sales!
I Sell Las Vegas! www.iSellLasVegas.com
Thanks and make it a terrific day…………Robin