Home loans are easier to secure than ever, and in Shasta County, there’s plenty of help for anyone who wants one. Mainly this is because of government-subsidized home loans like FHA loans, and USDA loans. In this article, we will cover some of the options for first-time home buyers wanting to find a home loan.
Federal Housing Administration Home Loan
Also known as an FHA loan. These loans are guaranteed by the Federal Housing Administration, and are perfect for first time buyers for several reasons:
First, FHA loans require a down payment of only 3.5%. Compared to conventional loans, these are very small down payments that are easier for people with less cash in the bank to pay.
Second, lending standards are more relaxed for FHA loans. Even if your credit score is somewhat low – you can still secure an FHA home loan.
The only downsides are that a) interest rates are often higher than with conventional loans (though still very attractive) and b) mortgage insurance payments are required.
Mortgage insurance payments are two part – an upfront payment and an annual payment The upfront payment is equal to 1.75% of the loan amount. The annual payments are variable, depending on how much the home owner put’s down.
Monthly mortgage insurance payments for FHA loans
- 30-year loan with a down payment of less than 5 percent: 0.85 percent
- 30-year loan with a down payment of 5 percent or more: 0.80 percent
- 15-year loan with a down payment of less than 10 percent: 0.70 percent
- 15-year loan with a down payment of 10 percent or more: 0.45 percent
US Department of Agriculture Home loan
Commonly abbreviated as USDA loans. These loans were originally designed to help farmers pay for their houses, but nowadays they are a helpful option for anyone in a rural area – like Shasta County. If you’re looking at a home in the unincorporated portions of the county, you may very well be eligible for a USDA loan.
USDA loans do not require down payments, and have very low interest rates. What’s more, rates for USDA loans remain fixed for 30 years.
The only real drawbacks are that mortgage insurance is required, and the strict income requirements on those holding USDA loans. Those requirements can be found here.
Both USDA loans and FHA loans can only be sold by an approved loan originator, such as Megastar Financial.
You may also be available for other help in securing a home loan. For instance, if you need cash to make repairs to your home, the Federal Housing Administration may sell you a special product called a 203(k). With this loan, the total loan amount is based on the value of the home after repairs – not before.
Also, mortgage banks are allowed to provide hardship relief when administrating FHA loans. For instance, they might temporarily lower interest rates for those who are struggling to make their payments. The nature of this sort of assistance is up to the mortgage lender and provided on a case-by-case basis.
Don’t want to rent forever but you’re not sure if you can get a home loan? Assistance is out there, and if you want to live in a house, you shouldn’t let anything stop you. Contact Megastar Redding today for more information.