Different Mortgages- La Grande OR Real Estate
When buying a home for the first time there are many different options and programs out there. How do you know which is the best option for you?
It all depends on your personal situation. The best place to start is to sit down with a lender and discuss the options that might work for you. If you are a military personnel, a VA loan might be the best option. If you have a small amount to put down, maybe an FHA. Or if you are moving from one home to another and have a substantial amount to put down, a conventional loan might be the best. One of the best places to start is by contacting a Mortgage Broker that deals with mortgages in your area.. Here is a break down of the mortgage options.
CONVENTIONAL - This is probably the majority of the loans out there and for a good reason. They tend to have the lowest interest rates and the best plans. They are typically designed for those that have a good amount of down payment, possibly from the sale of another home. If you have saved 10-20% for a down payment, this is also a good option. You will want to obtain this type of loan from a bank, credit union or mortgage broker. Each has their own fees, points and costs involved and you want to weigh the numbers and shop around.
80/20 CONVENTIONAL - Some first time home buyers are looking into these 80/20 loans where there is actually two loans going at the same time. The first is an 80% loan to the value of the home and the 2nd would be the remaining 20%. This is technically a 2nd mortgage on the home right up front. This can be convenient due to the fact the buyer does not need a large down payment if any but the fees and costs involved can be quite expensive. Just a few years ago, some lenders were handing these out like candy and many first time home buyers got themselves into way more than they bargained for. They didn't realize that certain loans had balloon payments or the rate increased dramatically in a year or two. Many of these home buyers lost their homes during this time. Be very cautious when applying for a loan and know all the details before signing the final documents.
FHA - This type of loan is government backed and allows for only a 3% down payment and usually good financing options. This is a good option for first time home buyers and most lenders can draw up the application for this process. The down side to this loan is there is usually mortgage insurance tacked on. This means that because the down payment is so low, the bank supplying the loan wants to guarantee they are not out of money if you default on the loan. For this reason, a small amount it added to each mortgage payment until the loan amount is 80% or less than the value of the home. The trick is though, that most banks won't tell you when this is, so you will want to keep checking back on the mortgage lender to see if this fee can be dropped. It usually takes about 2 years for this to happen.
VA LOAN - If you are in the military you have the option of going with a VA loan. This is an excellent option for those in the armed forces but can only be utilized a few times. Check with a lender that specializes in this field for the details on this type of loan. Typically the seller pays closing costs and the homes must meet certain standards to qualify. The government may also assist in some of the down payment.