Learn Your Loan Options for Obtaining a Mortgage
You may be asking how much is my house worth and thinking to get another mortgage. While there are tons of available financing options, it is essential to take time doing research with the basics of house financing. Doing this lets you save money and time in the process.
Being able to have good understanding of the market where your property or your prospective property is located and to whether it is offering incentives to lenders might mean additional financial advantages on your end. By taking closer look at your finances, you could be certain that you are acquiring mortgage that suits your needs the most. But among the plenty of choices that can be picked, how can you come up with your decision?
These are types of mortgages not guaranteed or insured by federal government. In most cases, they have fixed-rate. As a matter of fact, they’re among the hardest kinds of mortgages that a person can qualify for. It is primarily because of the stricter restrictions applied such as:
- Bigger down payment
- Higher credit score
- Lower income to debt ratio
- Possibility of private mortgage insurance
On the other hand, if you could qualify for traditional mortgage for instance, then they’re oftentimes less expensive compared to loans guaranteed by federal government.
These traditional loans are described either as nonconforming or conforming loans. In the latter, it is in compliance with the guidelines similar to loan limits that are set forth by GSEs or Government-Sponsored Enterprises. Such lenders normally buy as well as package these loans and selling them as a security on secondary market.
For conventional loans though, the max loan limit available is 548,250 dollars. Though this figure may vary depending on the area, especially on high-cost locations.
FHA or Federal Housing Administration is part of the US Department of Housing and Urban Development. It is providing different mortgage loan programs among Americans. FHA loans have lower down payment and is simpler to qualify than traditional loans. These loan types are perfect for first-time buyers because aside from the lower upfront loan cost as well as less stricter requirement, the down payment can be broken down to as low as 3.5 percent.
US Department of Veterans Affairs are guaranteeing loans. Though you should know that VA doesn’t make the loan themselves but they can guarantee mortgages that are made by qualified lenders. Such guarantees enable veterans to acquire home loans that have favorable terms.