Real Estate Financing
How much home can you afford? Use our real estate financing guide to learn about your loan options. There are several loan programs available, and depending on your credit history, there is bound to be one that is right for you. Here are a few examples of the most popular real estate financing programs offered today:
The fixed-rate mortgage is the most popular real estate financing option in use. These loans offer a fixed interest rate for the life of the loan, typically 15 to 30 years. Borrowers have peace of mind and know that their monthly payment will not change. Conventional fixed-rate loans have underwriting requirements established by Freddie Mac and Fannie Mae. They require certain down-payment and debt-to-equity ratios to qualify and are most attractive to buyers who plan to stay in their home for more than a few years.
With an Adjustable Rate Mortgage (ARM), the interest rate changes periodically, and payments may go up or down. Rates are tied to an index that reflects the cost of money at any given point in time. Generally, lenders charge a lower initial interest rate for the ARM than for the fixed rate mortgage. If you are expecting rates to decrease in the future, or if you are trying to maximize your purchase power today and know that your income will rise in the future, then this loan may be right for you. ARMs are attractive for buyers who expect to be in the home for a short period of time.
FHA and VA Loans
The Federal Housing Administration (FHA), offers loans for low-to-moderate-income home buyers. FHA loans have low down payments, and have slightly easier requirements than conventional fixed-rate mortgages. FHA loans have no income restrictions and even those with lower credit scores may be considered. Past bankruptcy does not necessarily disqualify borrowers from using this program!
In addition, the Department of Veterans Affairs (VA) offers a zero-down loan program. To take advantage, borrowers need to be among those listed as veterans and service personnel in the U.S. military. One of the biggest benefits of this program is that it eliminates the need for private mortgage insurance.
Local Home-Buying Programs
There are often state and local real estate financing programs available. These may offer down-payment assistance and programs for local home ownership.
Learn more about these local programs, lenders, and other finance options by contacting us today!