Getting A Mortgage
It’s not unusual for people to get excited about getting a mortgage to buy their first home. Home-buying season is in high gear, and would-be homeowners are looking for ways to finance the home of their dreams. After figuring out your credit score and the down payment, you need to figure out how much you will essentially need to borrow and what type of mortgage you want.
What is a Credit Score?
The most influential determinant of your loan rate is your credit score. The higher your credit score, the lower the interest rate. Your credit score is a three-digit number generated by a mathematical algorithm using information in your credit report. A person has three FICO scores provided by three major credit bureaus, Equifax, Experian and TransUnion. FICO scores range from 300 to 850, where a higher number indicates lower risk.
What is a Down Payment?
Your down payment plays an important and major role when it comes to buying a home. The amount required for a down payment depends on your loan type, with some requiring no down payment at all. A down payment is a portion of the purchase price that a home buyer pays from their own funds. It’s the part of the home purchase price that you don’t finance, but instead pay out-of-pocket.
Mortgage loan programs are constantly changing and evolving to reflect current market conditions. A licensed Homestead Mortgage loan specialist like Tim Barr is able to help you determine which program will best suit you.
Conventional Home Loan
Conventional loans conform to the loan limits set by Freddie Mac and Fannie Mae’s underwriting requirements, and offer more flexible terms and fewer restrictions than government-backed loans. For borrowers with good credit, conventional financing is the best way to go.
FHA Home Loan
An FHA loan is insured by the Federal Housing Administration (FHA), and great for buyers with less than stellar credit and a low down payment. The easiest loan to qualify for, and rates are typically lower than conventional loan rates.
USDA Home Loan
A USDA loan is backed by the United States Department of Agriculture (USDA), and designed to provide homebuyers in rural and suburban areas who have limited financing. The USDA Mortgage eligibility map shows you the areas eligible for this loan.
VA Home Loan
The VA loan is issued by approved lenders and guaranteed by the U.S. Department of Veterans Affairs (VA), that guarantees veterans, active duty military members and their families to purchase homes who might otherwise not be able to afford it.