The Most Expensive Feature In A New Home? The Mortgage.
Without a doubt, the word most associated with being a homebuyer is the “M” word:
Mortgage. Basically, it’s a loan from a financial institution to the homebuyer-with a pledge of property to a creditor as security for repayment. Latin scholars will point out that the root of the word, “mort,” is French for “dead.” That’s because the idea is to kill the loan over time by repaying the money borrowed.
The most common types of mortgages? VA. FHA. And Conventional.
All mortgage types are either conventional loans-or they are financial instruments backed by the U.S. Government. The government programs are either FHA (Federal Housing Administration) or VA (Veterans Administration). Everything else can be described as a Conventional mortgage.
The FHA and the VA offer a variety of mortgage choices.
These include 30-and-15-year fixed-rate mortgages, as well as adjustable-rate (ARMs) mortgages. All of them are insured or guaranteed by the government agencies that administer them. They are well known for their attractive low-or-no-down-payment terms. However, VA mortgages are not available to everybody; they are restricted to individuals who are qualified by military service or other entitlements. FHA loans, on the other hand, are available to all qualified homebuyers.
A VA loan offers some distinct advantages.
? No down payment is required in most cases.
? The loan maximum may be up to 100% of the VA-established reasonable value of the property.
? Flexibility of negotiating interest rates with the lender.
? No monthly mortgage insurance premium to pay.
? Limitation on buyer’s closing costs.
? An assumable mortgage, subject to VA approval of the assumer’s credit.
There’s more to it, of course. So go to www.valoans.com if you would like detailed information about VA loans.
An FHA loan is the mortgage of choice for most U.S. homebuyers.
? An FHA loan is for owner-occupied homes only-meaning you intend to live on the property.
? There is no maximum sales price, but there’s a maximum loan amount.
? Any homebuyer may use an FHA loan-as long as they do not currently have another FHA loan in their name. (There is a common misperception that an FHA loan is for first-time buyers only.)
? An FHA loan usually requires a minimum down payment and closing costs, easier credit-qualifying guidelines, easier debt ratio, and job requirement guidelines.
Go online for more detailed information about FHA loans.
There’s a huge variety of Conventional loans for prime and non-prime borrowers.
? Conventional mortgages allow simple interest loans (also known as interest-only loans). This is the fastest-growing segment of the mortgage industry.
? A Conventional loan requires a thorough credit review. Your credit score is very important.
? If a homebuyer is looking at a VA or FHA loan, it’s wise to see if there are any competing products in the Conventional loan market. It’s sometimes in the best interest of the homebuyer to go the Conventional loan route.
Be smart: don’t take the first mortgage you see.
Shop around. Ask your Realtor for a list of mortgage brokers or bankers who can help you make an informed decision. There are a lot of options out there; look for the one that fits your own individual financial situation. You’re literally going to be living with your mortgage for years. Make sure you’re compatible with it.
McAllen Foreclosures & Edinburg TX Homes for Sale
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