What Type of Loan?

Now that you’ve made the decision to purchase a home, it’s time to think about what type of loan best fits your needs. Loans choices are typically based on:

credit analysis
earnings
liabilities
job history
amount of down payment
location of home
owner or non-owner occupied
investment property

Fixed, Adjustable,  Interest Only

Fixed Rate
In a low interest rate environment, a fixed rate is the safe bet. Predictability is minimized with total payments for principal and interest remaining the same throughout the life of the loan. If your taxes and homeowner’s insurance are included with the payment and there are price changes to either or both, the monthly payment will change.

Adjustable Rate
If fixed rate loans have historically higher interest rates, adjustable rates provide lower start rates that will adjust on a periodic basis. In most cases, the adjustment, whether up or down, tends to be once a year and will affect the principal and interest paid. Another benefit to a variable rate loan is if you are planning to live in the home for a shorter period of time, you may be able to save money in the short run.

Interest Only
Interest only loans are popular with flipping properties. These are non traditional loans and are not eligible to be backed by Fannie Mae and Freddie Mac. It is considered a temporary loan allowing the investor time to renovate the property. Interest only loans are fixed with the principal amount never changing and the total payment goes to paying interest.

 

Type of Loans

Conventional
Conventional loans have become very competitive with down payment options as little as 3% down and options for little or no mortgage insurance.

FHA
A great choice for first time home buyers providing greater flexibility for qualifications and a solid option for those with credit concerns. Down Payment is as little as 3.5%.

VA
If you have served military time or a spouse of someone who has served, you may qualify for a zero down payment with no mortgage insurance.

USDA
A great zero down payment loan for home buyers who buy in certain geographic areas.

WSHFC
This is not really a home loan. Rather, a subsidy to most loans with down payment assistance making the primary loan purchase a zero down payment. It’s a wonderful program for first time home buyers.

Non-conforming hard money loans (flipping properties)
An excellent choice for investors who are looking to fix and flip. It is not intended for owner occupied use.

Rehab
With as little as 3.5% down, it’s possible to buy a home with deferred maintenance or a home needing improvements and incorporate the cost of the fixup into the loan.

Reach out to us with any questions at 253.838.8400!