Mortgage Myth # 7: Governemt Loans are for those with Bad Credit
Two of the most popular loans out there are the VA and FHA insured loan by our government. The myth about these loans being the one of last resort for those with marginal credit and low-down payment cannot be farther from the truth.
The government insures these two types of loans to protect the lender form having any losses from granting a mortgage to the borrower. Each individual lender has their own specific underwriting guidelines that they feel comfortable with prior to requesting insurance from the VA or the FHA.
The VA home loans have no monthly mortgage insurance no matter what the down-payment and do have an upfront cost for each Veteran depending on how often they have used their VA benefits.
The FHA home loans have both and upfront cost and a monthly cost. These costs are fixed by the down payment and do not vary depending on the borrower’s credit scores. This is a major benefit for those with a low down-payment and credit scores lower than 660.
If they were to apply for a conventional loan with 660 or lower scores they will have a much higher interest rate due to the risk associated with their credit score and have a much higher PMI payment as these costs are credit score driven.
For those borrowers with little money down these loan program are great. Those veterans who qualify can put no money down up to the county lending guidelines for Long Island in 2017 that is $ 636150. You can also get up to 4% seller concessions to help cover closing costs. Those who are not Veterans can apply for the FHA 3.5% down-payment program, which also allows a 6% seller concession to help with closing costs.
Recently lenders have come out with Elite program for both the FHA and VA loan Products with offer below market financing for those that qualify. Requirement as of the date of this blog are having a 680 or higher credit score and a loan amount greater than $ 175,000.
Give us a call at 631-589-3600 to see what elite program you might qualify for and the low, low interest rate you can get.