A person buying a house for the first time would like to choose from an array of loan types that give them the best options available. Among the loan types available like FHA, VA home loan, and other choices that can help them save money. Not only will the right home loan grants them perfect rates, it also boosts their confidence in their ability to invest to a house. If you’re among these first time buyers, you may want to know these loans that other first timers get to help with your investment.
FHA loan is a mortgage insured by the Federal Housing Authority. It’s a popular choice among first time buyers, as well as those who want to save money on mortgage, because of its cheap downpayment. A buyer only needs to give a 3.5 percent downpayment for the house, some upfront payment, and mortgage insurance paid yearly. What’s the best thing about this loan type is it’s available for everyone who wants to get a mortgage and doesn’t require as much eligibility requirement unlike other loans. With its accessibility, buyers don’t have to worry about not getting this loan and just start investing.
Conventional loans are the typical loans offered by lenders. Unlike FHA loan, this loan requires higher downpayment, but it’s possible for buyers to get more loan options. Numerous companies offer this loan type, allowing buyers to compare rates and find the perfect loan type that suits their budget.
What’s beneficial about this loan is buyers are not limited to paying 20 percent downpayment and other combinations that will be perfect for a specific investor. For instance, a person paying 20 percent downpayment doesn’t have to get private mortgage insurance. Those who can’t pay the 20 percent downpayment can look into signing up for 5 percent or 10 percent downpayment then add PMI to get pre-approved of the loan. On the other hand, buyers can also pay higher than 20 percent downpayment if preferred. Above all loan types, conventional mortgages are considered the most customizable option that meet every buyer’s requirement.
USDA loan is considered limited, but the right client will be able to take advantage of this loan type. USDA loan is an Agriculture Department-insured loan that may only be available in specific loans. Most people taking advantage of this loan type are those located in rural areas and those who want to save money on downpayment. Buyers don’t have to pay for downpayment, but they will certainly need mortgage insurance before getting approved of the loan.
Although this loan can be considered as least favorable option for some buyers, more lenders and credit unions are offering this loan type, giving buyers more opportunities to start investing on their properties. It’s crucial for buyers, however, to check the requirements in taking this loan.
VA loan is the perfect option for active military servicemen and veterans. This loan doesn’t require downpayment, but clients must meet numerous eligibility requirements. The Department of Veterans Affairs offer this loan to active servicemen and veterans who met specific active duty service period. Usually, buyers need complete 90 to 180 days of active service before they can apply for the loan. They must also get a Certificate of Eligibility issued by the VA as part of the requirement. Aside from active servicemen, veterans’ surviving spouses can also file for this loan, given that they didn’t remarry.
Portfolio loans are not directly marketed to investors. They are documented on lenders’ books. Unlike other conventional loan types, lenders offering portfolio loans establish unique loan approval criteria that buyers must meet. Numerous people are also getting this loan, but they have special cases in terms of investments. They may also have unique financial status to get this loan for their investment. Buyers must check lenders’ unique requirements to find out whether this loan is perfect for them or not.
Any first time home buyer will feel nervous in getting their first mortgage. However, the number of loan options gives them hope in investing on properties. They can select from this list of mortgage options and among different lenders to know how much they can save. Be sure to book with a trusted lender to know you’ll get the perfect deals.