Home mortgages can make owning a home feasible for countless Americans. Whether you’re looking at property for the first time or you’re interested in refinancing your home, there are mortgage loan options that can make homeownership accessible. But which home loans might be available to you? And which is best for your current situation?
Loans or mortgages fall into one of two categories: they can be either government-backed or conventional (meaning loans that are not guaranteed or insured by agencies like the Federal Housing Administration, the USDA, or the Department of Veterans Affairs). There are different types of conventional home loans to choose from, though conforming loans are probably the most common. These home mortgages and loans align with guidelines established by lenders like Fannie Mae and Freddie Mac and are intended to make mortgages more accessible to all Americans. They also tend to have low-interest rates and have no mortgage insurance premiums.
Home Loans for First-Time Buyers
If you’re buying a home for the first time, you might be overwhelmed by the thought of spending hundreds of thousands at one time. In most cases, purchasing a home outright won’t be an option. But home mortgages for first-time buyers allow you to pay for your home gradually, within a fixed timeframe (typically spanning 10, 15, 20, 25, or 30 years). With this type of loan, you can often choose the size of your downpayment, though the traditional 20% is still embraced by many. While there are interest payments associated with home loans, keep in mind that interest rates are fixed and won’t change over time.
Backed and designed by the U.S. Department of Agriculture, these loans were originally intended to make purchasing homes in rural areas more affordable for Americans. With a USDA home loan, buyers can actually purchase a house with no money down. In some cases, buyers can obtain 100% financing on homes in eligible areas. However, you do need to meet certain criteria to obtain a USDA loan, which are based on home location, income, and credit score.
These loans are backed by the Federal Housing Administration (FHA) and are designed specifically for low-to-moderate-income borrowers. With FHA loans, homebuyers can make lower minimum down payments and qualify for loans with lower credit scores than conventional loan options. You can also pay lower interest rates, though these may be adjustable or fixed. In addition, the buyer is required to purchase mortgage insurance. Considering that you can borrow up to 96.5% of a home’s value with an FHA loan, it’s no surprise this is a popular option — though it’s important to note that there are restrictions with this loan that don’t apply to conventional loans.
A loan backed by the U.S. Department of Veterans Affairs (VA) is an option for home mortgages available to eligible current or former members of the U.S. Armed Forces, as well as their surviving spouses. VA loans offer up to 100% financing and do not require mortgage insurance. In addition, they offer low rates (which can be fixed or adjustable) and come with more favorable qualifications for income, credit, and debt than other home mortgages do. While not every person who serves is eligible for a VA loan, this is a highly attractive option that can make home ownership possible for countless Americans.
Contact Us to Learn More About Your Redding Home Mortgage Options
Now that you have a greater understanding of the possibilities for home mortgages you can choose from, it’s time to take the next step in the home buying process. To get started with your home loan, contact our team at Megastar Financial Redding. We’d love to help you finance the home of your dreams.
MEGASTAR FINANCIAL CORP. is an Equal Housing Lender. DBO Lic # 603 G365 NMLS Lic # 235828(3043)*
Licensed by the Department of Business Oversight (DBO) under the California Finance Lenders Act * NMLS # 1162668.
As prohibited by federal law, we do not engage in business practices that discriminate on the basis of race, color, religion, national origin, sex, sexual preference, marital status, age (provided you have the capacity to enter into a binding contract), because all or part of your income may be derived from any public assistance program, or because you have, in good faith, exercised any right under the Consumer Credit Protection Act. We are regulated by the Fair Housing Act (overseen by HUD) and the Equal Credit Opportunity Act (overseen by CFPB), Washington, DC, 20580.
Example of 30 year mortgage:
$300,000 sales price, $60,000 down payment, $240,000 loan amount, 360 months, 3% interest rate, 3.132% APR, $1,029 Principle and Interest monthly payments, Payment does not include taxes, insurance premiums or HOA dues. The actual payment amount will be greater. Rates shown valid on publication date of June 29th, 2020. This example is for a conventional, not jumbo, mortgage product; there are restrictive upper loan amounts for conventional loans based on the property’s location. Example given requires a minimum 740 credit score with a debt to income ratio of under 45%. Applicant must be employed. This is not a promise to lend. All terms and conditions are based on the subject property, the applicant’s credit worthiness and the applicant’s ability to repay the loan.
15-Year Fixed-Rate Mortgage:
The payment on a $300,000 15-year fixed-rate loan at 2.723% and 80% loan-to-value ratio (LTV) is $1,626. The annual percentage rate (APR) is 3.178%. Payment does not include taxes and insurance premiums. The actual payment amount will be greater. Rates shown valid on publication date of June 29th, 2020. This example is for a conventional, not jumbo, mortgage product; there are restrictive upper loan amounts for conventional loans based on the property’s location. Example given requires a minimum 740 credit score with a debt to income ratio of under 45%. Applicant must be employed. This is not a promise to lend. All terms and conditions are based on the subject property, the applicant’s credit worthiness and the applicant’s ability to repay the loan.