What is the best type of mortgage loan?

Home buyers standing in front of their new homeBuying a home for the first time can be intimidating because it may very well be the largest purchase you will make in your lifetime; and you don't want to make a mistake. The first step to buying a home is to seek mortgage pre-qualification and pre-approval from a lender. There is a difference. Pre-qualification means the lender will give the home buyer his or her opinion of mortgage qualification. A pre-approval is a more detailed and reliable estimate of the first time home buyer's ability to buy a home. The lender will obtain your credit report and determine whether there is any derogatory information contained in the credit report that could deny you a mortgage.

VA Home Loan

VA logoIf you're an eligible veteran, take advantage of the VA home loan benefit. Here's why. There is no down payment requirement for a VA home loan. The home seller is permitted by the Veteran's Administration to pay ALL closing costs for the veteran and a good percentage of escrow and prepaid costs (i.e. real estate tax and homeowner's insurance escrow). Because there is no down payment requirement, it may be possible to purchase a home with no money out of pocket!

VA home loans can be used for:
PURCHASE:

  • Buy a home, a condominium unit in a VA-approved project
  • Build a home
  • Buy a manufactured home and/or lot
  • Improve a home by installing energy-related features or making energy efficient improvements
  • Simultaneously purchase and improve a home

REFINANCE:

  • To refinance an existing VA-guaranteed or direct loan for the purpose of a lower interest rate
  • To refinance an existing mortgage loan or other indebtedness secured by a lien of record on a residence owned and occupied by the veteran as a home

Who is eligible for a VA home loan?

You have served 90 consecutive days of active service during wartime,
or,
You have served 181 days of active service during peacetime,
or,
You have more than 6 years of service in the National Guard or Reserves,
or,
You are the spouse of a service member who has died in the line of duty or as a result of a service-related disability.

 

 

Read more 

USDA logo2. USDA HOME LOAN - The USDA home loans do not require a down payment. That's right, zero down and the seller is permitted to pay a large percentage of the home buyer's closing cost. There are income limits and the house must be located in a rural area as defined by the USDA. Read more

FHA logo3. FHA HOME LOAN - The FHA mortgage has become extremely popular over the past 10 years with first time home buyers because the FHA loan requires a small down payment of only 3.5% (3.5% X $100,000 = $3,500). The seller is permitted to pay up to 6% of the buyer's closing costs (6% X $100,000 = $6,000). The buyer can add a non-occupying co-borrower (co-signer) to the loan. The FHA down payment can be "gifted" by a relative and other approved donors. Read more

Fannie Mae and Freddie Mac signs4. Conventional Loan - The conventional loan, also called "conforming" loan is a mortgage that is not backed by the Federal Government or Federal Agency. The conventional loan is offered by banks and mortgage lenders who then sell the loan to either the Federal National Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage Corporation (Freddie Mac). The conventional loans are an ideal choice for home buyers who have at least 5% down payment or greater. Read more

Woman with a perplexed lookWho pays closing costs?

The closing costs are typically paid by the buyer. Although, the seller can pay a percentage of the closing costs based on the type of loan (FHA, VA, Conventional. USDA, if applicable) and written into the sales contract.  Learn more about Seller Paid Closing Costs

Who pays for the Realtor® fees, buyer or seller?

In most transactions, the seller will pay the commission, however, the payment may be paid by the home buyer, if agreed to by buyer and seller and stated in the sales contract.

What is the difference between a Realtor® and a real estate agent?

A real estate agent (real estate sales person) is someone who is licensed to practice (list and sell) real estate. A real estate broker is a higher license and in most states, permits the broker to own and operate a real estate company. The broker license permits the licensee to employ licensed real estate agents. A real estate agent or real estate broker may use the term Realtor® if he or she is a member of the National Association of REALTORS®.

How much can I afford for a home loan?

A number of factors determine how much you are able to borrow. For example, some loans (i.e. FHA, VA, USDA) allow you to borrow more money than other loans. Your monthly income and monthly obligations is a major determinate of your loan amount. You can use the Debt to Income Calculator to get a rough estimate of your monthly loan payment.

How is the credit score calculated?

Assuming have a developed credit history, have 3 credit scores. The largest credit reporting agencies, Experian, Equifax and TransUnion companies each calculate "their" credit score differently from each other. The credit score calculation (formula) is a secret, however, some information on the calculation has been released. See Credit Score

How to improve your credit score in 30 days? Can bad credit be deleted?

It is possible to delete bad credit and depending on the credit account, errors can be removed. Read more

How much is pmi insurance?

The cost of PMI (private mortgage insurance) depends on the amount of down payment, type of property (i.e. single family, duplex), the loan amount, and of course the private mortgage insurance company. The private mortgage insurance rates vary from company to company and from state to state. Read more