Did you know that more than 100 million Americans currently have debt on their homes? With average home prices rising to unprecedented levels, it’s becoming practically impossible to buy a home with all cash. Thankfully, there are a variety of loan products out there to help potential buyers acquire homes.
But how can you choose the right loan product for your needs? Keep on reading and we’ll take you through different loan products that you might be able to use when you want to buy a home.
- Conventional Mortgages
When we talk about a conventional loan, we mean a loan that’s not backed by the federal government. A borrower with stable income, good credit, and the ability to make a three percent down payment can typically qualify for a conventional loan. This loan is usually backed by Freddie Mac or Fannie Mae, two government-sponsored groups that buy and sell mortgages.
- Government-Insured Federal Housing Administration (FHA) Loans
If you are buying a home for the first time, you can usually get a loan that’s insured by the FHA (Federal Housing Administration). With this loan, you can put down as little as 3.5 percent.
The credit score requirements for an FHA loan are more relaxed than conventional loans. However, the FHA doesn’t lend money directly. Instead, the loan is guaranteed by a lender that is approved by the FHA.
The downside to this loan is that you need to pay an annual and upfront mortgage insurance premium for the life of the loan.
- Government-Insured Veterans Affairs (VA) Loans
Homebuyer loans can be guaranteed by the U.S. Department of Veterans Affairs (VA) for veterans and their spouses. Borrowers can get full financing with no down payment.
VA loans are best for active service members and veterans and their families who want competitive terms.
- U.S. Department of Agriculture (USDA) Loans
USDA loans are similar to VA loans. These loans are guaranteed by the USDA, come with full financing, and no money down. This loan is designed for low-income citizens who live in rural areas.
The home that you want to buy needs to be in an approved area and likely won’t apply to any major cities.
You also need to live in the home for at least one year. This means that you can’t use this loan for an investment property or as a vacation home.
No matter what loan you choose to get, it’s important that you go with a reputable mortgage lender, such as Trinity Oaks Mortgage (trinityoaksmortgage.com).
Which Loan Products Will You Consider?
Hopefully, after reading the above article, you now know how to choose the right loan product for your family and budget. As we can see, there are many different options out there. And by knowing what you’re eligible for, you can save money and get the home that’s best for you and your family.
Make sure to check out the rest of our site for more helpful articles about loan products and more today!