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Are you ready to shop for a mortgage so you can start shopping for a house? You have tons of home loan options. Knowing what each type offers can help you narrow down the field.
Just as there are many different types of homes, there are many different types of mortgages. Your home loan options can range from conventional loans to VA-backed loans to mortgages tailored specifically for first-time home buyers (FTHBs.)
A “conventional” home loan is the one you’re probably thinking of off the top of your head. Decent credit score required, 20% down payment, 30 year loan, fixed rate. If all of this sounds like you, a conventional loan subject to conforming loan limits could be for you. If not, keep reading!
FHA home loans are backed with mortgage insurance provided by the Federal Housing Administration (FHA.) An FHA loan can allow you to qualify for a low down payment between 3.5% and 10% depending on your FICO score, and also give you more wiggle room when it comes to your income and credit rating.
First-time homebuyers can also get help with closing costs. In some states, you’ll have to meet specific income limits. Conforming loan FHA loan limits vary by county, so you can afford a home even in an area with a high cost of living.
A VA loan is backed by the U.S. Department of Veterans Affairs (VA.) There is no maximum loan amount, and you can get a home financed with a low down payment (or even a zero down payment.) You’ll have fixed monthly payments, and won’t have to add private mortgage insurance (PMI.)
USDA loans are backed by the U.S. Department of Agriculture, and make it possible for people to buy homes in rural areas with a low down payment or no down payment. You’ll also have low interest rates and an affordable monthly payment, so you can live comfortably in your home on the outskirts of the suburbs or deep in the countryside.
Fixed-rate mortgages are the most popular type of home loan financing available. A fixed-rate mortgage has an interest rate that is locked in during the loan application process, and never changes over the life of your loan.
This is in contrast to adjustable-rate mortgages (ARMs.) An adjustable-rate mortgage stays in step withy federal interest rates, which means your home payment can rise abruptly and cause your monthly finances to be thrown into disarray.
Depending on the borrowers’ credit scores, interest rates on a conventional loan can vary widely. To get the best interest rates, you’ll want to find a lender that offers guidance on what the best loan is for your situation, with mortgage rates that don’t include exorbitant fees or loan officer commissions.
The lower your interest rate is, the lower your payment will be, and the less you will pay total over the loan term. You can leverage this to make additional payments towards principal, and interest will shrink as you near your payoff date.
For some loans, your lender might finance more than 80% of the purchase price. This increases the lender’s risk, so they may require you to pay private mortgage insurance premiums.
This can make your monthly mortgage expenses more costly, so many homeowners, once they have built up 20% or more equity in their home, will refinance to get rid of the insurance premium (and to get a lower interest rate, too!)
Now is a great time for looking into home loan options. You can use our free Instant Rate Quote tool and Rate Tracker to find out how much you could be saving every month or over the life of your loan.
At Sammamish Mortgage, all of our Loan Officers (LOs) are salaried. This means they always put the client first, making sure you get the best loan for your budget, not the biggest one to earn a commission.
We offer some of the most competitive rates in the nation, and it’s our goal to give you a hassle-free home loan experience. We’re proud to say we close most of our loans in 30 days or less. We offer a wide variety of home loans, including jumbo, FHA, and VA loans, so you can start looking for a home as soon as possible.
For more information on your home loan options, feel free to contact us today. We currently lend in all of Washington, Oregon, Idaho and Colorado and have been providing mortgage programs to borrowers since 1992. Our friendly team of experienced mortgage professionals will advise you on which home loan program best meets your needs.
Are you ready to apply for your home loan and lock in a low interest rate? If so, Sammamish Mortgage can help you get started. Get in touch with us today!