Financing

       Money, money, money. How do we even get started? There are tons and tons of ways to finance a home, on this page I'd like to break down a few of those that are interesting to me.

FHA Loan Mortgage:     

         I'd like to start with  basics. What most first home buyers use to finance their first home is an FHA loan. This FHA loan is a mortgage backed by the governmental Federal Housing Administration. The FHA program is one put in place in the 1930's to help stimulate the housing market by making homes more affordable for those with small cash deposits or low credit scores. Here are some of the mechanics of an FHA loan:

Nice about FHA loans: 

  • Down payment as little as 3.5%
  • Easy to qualify for, no credit no problem
  • Gifts from approved givers can be applied to down payment 
  • No prepayment penalties. refinancing or early payouts with no penalties 
  • FHA loan can be assigned to another person if you choose
  • Home improvements can be funded by FHA 203K program (click for more info)

Limitations:

  • Limited amount that can be borrowed, 
  • Mortgage insurance premium is expensive 

Where do I Qualify: 

  • Online 
  • Mortgage Lender 

Conventional Fixed-Rate Mortgage 

If FHA loan doesn't seem like the right fit, there is the conventional Fixed-Rate Mortgage. A loan that has a interest rate that will never change for the duration of the loan. Conventional, or conforming simply means that the loan will follow specific, established guidelines. There are two options here, either a 30 year fixed-rate mortgage or a 15 and 20 year fixed rate mortgages. 30 year is popular for the low monthly payments, however the interest payments are spread over 30 years so you end up payer for more. The 15-20 year is a shorter term that helps pay off the home sooner, and build equity faster. The 15-20 are popular for refinancing 

Good reasons to get a Conventional FR 

  • Often, less paper work that FHA loans to help speed up the process 
  • No interest rate surprises 
Limitations:
  • Strong credit score required, at least 740
  • Down payments minimum of 5% - 20% 

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