Conventional Loans, you may know them as Fannie Mae or Freddie Mac loans, are not insured by the government. The government instead sponsors theses entities by supplying liquidity to allow for the continous flow of credit. Conventional purchase loans typically require a minimum of 3% to 5% down payment. Purchase loans with less than a 20% down payment will normally require some type of mortgage insurance added to the payment.
FHA loans have been helping people become homeowners since 1934.
Some benefits of FHA loans are:
What does FHA have for you?
Buying your first home?
FHA might be just what you need. Your down payment can be as low as 3.5% of the purchase price, and most of your closing costs and fees can be included in the loan. Available on 1-4 unit properties. They tend to be more lenient on areas such as credit, funds to close and co-borrowers.
FHA mortgages are home loans that are insured by the Federal Government. This insurance protects the lender from losses suffered if the home goes into foreclosure. It is not the same as hazard insurance or insurances that pay in the event the borrower dies or becomes disabled.
Most loans use a method of analyzing credit called credit scoring in the underwriting process. Studies have demonstrated a direct relationship between low credit scores and higher mortgage delinquency rates. As a result many lenders have established minimum credit scores at which they will accept loans. Unfortunately, a lack of credit, old delinquencies or incorrect information on the credit report can cause a low credit score. FHA does not have specific credit score requirements. Although a high credit score may assist in getting the mortgage approved, a low score is not automatically cause for denial. If the credit scores are low, then it is up to the borrower to demonstrate his/her ability and willingness to pay the loan back. This allows the borrower to explain the circumstances surrounding the credit difficulties and have that explanation considered in the underwriting process.
The underwriter on an FHA loan will review the credit and payment history of a customer concentrating on the most recent 12 to 24 months. If the customer has had a good payment record over the past 12 to 24 months they can often get approved for a mortgage even when Conventional financing has turned them down. An experienced loan officer can help the customer clearly tell their story and will often make suggestions as to how to make the file more acceptable to FHA. Because of FHA's leniency, some borrowers with past credit problems elect to use FHA for loans when they have a substantial down payment rather than getting a higher interest rate conventional loan. FHA tends to be more flexible than Conventional financing in the money needed to purchase the home.
FHA allows the borrower to get the funds necessary to close from several sources. They include such areas as personal savings, gifts, grants, loans from retirement accounts and seller contributions.
The USDA changed rules in 2009 that makes millions of Americans eligible for its rural mortgage programs. The American dream of home ownership has become more difficult as families struggle to come up with the 20% down payment that many conventional home loans require. With the USDA loan many are still able to get a zero down home loan.
USDA also allows current USDA loan borrowers the opportunity to refinance into another USDA loan at today’s low rates.
Do I Qualify for a USDA Loan?
In the past USDA Loans were often call "farmers loans" but times have changed. Almost anyone outside of a major metropolitan area looking to purchase a home can qualify for a USDA loan. Eligibility varies based on area, your income, credit history, and number of dependents claimed so it's important that you call and speak with one of our experts to see if you qualify.
USDA Loans are for:
VA mortgage loans are one of the best and safest methods to use when buying a home. Now even active duty personnel can qualify. If you are a Disabled Veteran, you may qualify for additional benefits on a VA home mortgage loan. The VA Home Mortgage Program does not limit the number of times a veteran may use the program.
VA mortgage loans extend to not only the Army, Navy, Air Force and Marines but also to Reservists and National Guardsmen.
The Veterans Benefit Act, signed recently increased the VA loan limit to $417,000 for a loan with no money down. It increased the eligibility Veteran and of active duty personnel and increased the benefits to Disabled Veterans.
Some of the benefits of the VA Mortgage Loan Program are:
• VA Mortgage Loans are guaranteed for no money down up to $417,000
• No monthly mortgage insurance is required
• All VA Mortgage Loans are assumable under certain conditions
• It is easier to qualify for a VA Loan than a conventional loan
• VA Mortgage Loans can be refinanced
No Money Down Up to $417,000
You do not have to put any money down to qualify for a VA Home Mortgage Loan for up to $417,000. If the seller agrees to pay the closing costs, you may be able to purchase the home with no out of pocket cost. The loan and sales contract can be set up so that the VA Home Mortgage Loan covers 100% of the selling price and the seller covers the closing cost.
The VA Funding Fee
The Veterans Administration assesses a Funding Fee to all VA loans between .5% and 3.3% of the loan amount. The fee is added into the amount of the loan to be paid over the life of your VA home mortgage loan. The VA Funding Fee replaces the much higher priced Mortgage Insurance required when you get a conventional home loan. If you are a Disabled Veteran, you may qualify to get the fee waived completely.
Assumable VA Mortgage Loans
VA loans are also assumable. If the person assuming the mortgage is a veteran with VA eligibility, the original veteran will not be giving up the amount of eligibility that they used to get the loan a the beginning. Veterans should use great care and closely investigate the terms of an assumption before allowing someone to assume their mortgage. It is too great a benefit to give up.
Qualifying for a VA Mortgage Loan
The VA offers excellent qualifying standards. The VA does not use credit scoring in their analysis of the loan, however lenders set their own minimum credit scores for such loans. Even if you have experienced some financial difficulties in your life that caused your scores to be low but have maintained a good payment record over the past year or so, you may qualify for a VA mortgage loan. This can be a tremendous savings compared to the cost of conventional loans when the borrower's credit scores are low.
VA Mortgage Loans may be refinanced
VA mortgage loans have built in features allowing a loan to be refinanced to a lower interest rate without all of the criteria normally associated with a conventional loan. This is called an Interest Rate Reduction Loan; the veteran can secure a lower interest rate without any credit checks, appraisal, and income or asset verification and can roll the costs of the transaction into the loan so there are no out of pocket costs.
Purchase or Refinance
All loan products noted above will allow for a purchase or refinance. FHA and VA offer a streamlined refinance product requiring limited documentation with some programs allowing for no credit qualification and no appraisal required.
Call today to find out which loan is best for you. Contact us in Simpsonville at 864-962-9121 or in Bluffton at 843-706-9376. Apply on secure online application and you could have your answer in as little as 15 minutes. Start HERE!