Which Loan Best Fits You?

First lets start with the basics:

What is a loan?

A loan is a sum of money borrowed that is expected to be paid back with interest. 

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When purchasing you're home, you'll need a mortgage loan (unless you're paying full in cash). A mortgage loan is a legal agreement made between you and a bank or preferred lender that lends money with an interest rate in exchange for title of the property being purchased. Upon the payment of debt, the title will be conveyed to the owner (you). 

When choosing what loan best fits first time home buyers, I recommend meeting with a mortgage broker before deciding on a loan. A bank can also provide loans too, except they are limited to that bank alone. 

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1. Conventional

2. FHA

3. VA

4. ARM

5. USDA

 

 

1. Conventional Loan:  This loan is the most common mortgage option. This loan is not made or insured by the government. This is called a non-GSE loan (non-government sponsored entity). Half of all conventional loans are called "conforming" mortgages due to being conformed by guidelines made by Fannie Mae and Freddie Mac. People usually choose conventional loans because they offer better interest rates and loan terms which results to lower monthly payments.

* Best For: Repeated Buyers *

Down payment: 20% standard - 10% minumum  (3% - 25% of a home's value) all depending on the borrower's credit and financial standing. Low rates for borrowers with excellent credit.

 

2. FHA (Federal Housing Administration) Loan: This option makes ownership more affordable with less down payment and easier credit requirements. An FHA loan is insured by the Federal Housing Administration. Borrowers who have FHA loans pay for mortgage insurance - this protects the lender from a loss if the borrower defaults the loan. Those with a credit score lower than 500 are ineligable for an FHA loan.  

* Best For: First time home buyers * 

Down payment: 20% standard - 3.5% minimum (with a credit score of about 580 or higher). Flexible guidelines. Low interest rates.

 

3.  VA (Veteran's Affairs) Loan: This loan is only available to veteran's. Designed to provide housing and assistance to veteran's for the chance to purchase a home without a down payment. As a veteran you must meet service requirements and credit/income requirements in order to be eligible. 

* Best For: Veterans only *

Down payment: No down payment.

 

Arm (Adjustable Rate Mortgage) Loan: A home loan with an interest rate that can change periodically. This type of loan fluctuates with the market but the initial rate starts out lower than a fixed-rate mortgage.

*Best For: Any interested buyers *

Down payment: 20% Standard – 10% minimum

 

USDA (United States Department of Agriculture) Loan: This mortgage choice was created to promote the purchase of rural land. Mainly for those who live in rural areas and for low-income borrowers.

*Best For: Investors *

Down payment: No down payment.

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For any further information or questions, please feel free to email me! Located under the "contact" tab!

The First 5 Steps for Home Buyers: Where do I start?

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Is or will probably be the first question you have upon searching for your first home. Before getting into real estate, I was unaware of all the steps involved with purchasing a home. This is a very common question people ask.

Agents like myself, are here to guide you towards the first step of buying a home and being by your side throughout the entire process. 

Let's start:

1. Credit Check:

The first step you'll want to take before actually searching for homes is to check your credit. What this does is ensures that there are no inaccuracies in your credit report. By the time you are ready to apply for your loan, this process will get you ready to secure a loan when buying your new home.  Take care of any discrepancies before getting qualified. A mortgage lender will review your credit. Depending on the type of mortgage loan, they will require a minimum score of 620-640. Having a good credit score will affect your eligibility and your mortgage interest rate. The higher the better!

 

 

 

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2. Get Pre-Approved:

Buyer's who are already pre-approved have a starting advantage when looking for a new home. Make sure to get your pre-approval soon! Contact a lender of your choice or you can visit www.cristalcellar.com and have them review your financial data to see how much you qualify for.

3. Pick your Agent:

Find the perfect agent that best fits you. Your trusted agent will help you through the home buying process from searching for your perfect home to negotiating the best terms and price, and everything else that occurs during escrow. Choosing the right agent will make or break you in the overall success of your home buying process.  Pick one you trust and feel most at ease with.

4. Affordability - Real Estate Market:

There are online mortgage calculators that you can use to help you get a ballpark estimate for the amount of the mortgage payment you would be paying according to the purchase price of the home. Remember, this is an estimate not the actual mortgage payment.

Don't forget to do your research when looking for your new home. Including property taxes and the area of the neighborhood you're looking into. Some neighborhoods & new developments include HOA fee's & mello roos. Your real estate agent can provide you with this information as well.

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5. House Hunting:

This is the time where you and your agent discuss just exactly what you and your family (or possibly just you) are looking for. Review over your needs and wants for your ideal home. This process will help your agent eliminate all the other homes that you would most likely not be interested in. Your agent will go over some properties with you, send them via email (etc.) and meet in person to discuss over these properties so you and your agent could tour these homes in person. This is where the adventure begins. 

If you have anymore questions or would like to schedule an appointment to find out more, feel free to contact me.

I hope you enjoyed this read. Come back and visit the blog again soon!