Mortgage Loans for Seedlings
What exactly is a loan? A loan is when money is given to another party in exchange for repayment of the loan principal plus interest. If you do not have enough funds to purchase a home, then you can opt to take a loan from a lender (banks, credit unions, etc). There are several types of home loans/mortgages but the common ones include Conventional, Federal Housing Administration (FHA), United States Department of Agriculture (USDA), and Veteran affairs (VA). Let’s break this down. If you are the seed, then the lender is the water and your knowledge is the sun. The more equipped you are with information, the better the odds of getting a loan that (1) fits your needs and (2) is not arguably predatory on your circumstances.
Loans with 0% Down
USDA loans offer 0% down payments and are restricted to eligible people in rural land spaces. The mission of a USDA loan is to provide affordable home ownership opportunities to low-to-moderate income households to stimulate economic growth in rural and suburban areas. You are required to live in the home for the first year. USDA loans don’t have Private Mortgage Insurance (PMI), but these specialized loans require two different forms of mortgage insurance: an upfront guarantee fee and an annual fee that serves as the monthly mortgage insurance premium (MIP). Click on the link to explore your options and eligibility for a USDA loan.
VA loans are exclusively for veterans and offer 0% down.
Flexible Loans
FHA Loans come in many different forms. For the standard FHA loan you’ll need 3.5% of the purchase price upfront (often called a down payment) and about 3-5% of the purchase price for closing costs. So if your dream home is a $600,000 3-bedroom Brooklyn house, then you’ll need $21,000 for the down payment and roughly 24,000 at the closing table. New York is expensive! Your lender will be able to to give you a breakdown of the total monthly payment. FHA loans come with both a Private Mortgage Insurance (PMI) and Mortgage Insurance Premium (MIP) that does not go away unless you refinance the mortgage. Lastly, it is required that you live in the home for the first year as your primary residence in order to qualify for the loan.
**The HUD $100 down program is an FHA loan with a twist.
Cost Effective Loans – Editors Pick!
Conventional loans are issued by private lenders (banks, credit unions, and other lenders) and are not backed by the government, like USDA or FHA loans. These type of loans are one of the original or older loan options. To qualify you’ll need a minimum of 3% down and very good credit. Most lenders require 15% down if you are purchasing a 2-family home with this type of loan. Unlike the FHA loan, once you hit 20% equity in the home you can request to have the PMI removed form your monthly payments.
Even if you are not looking for a home right now, start building a relationship with your lender. This person has the flexibility to work the numbers in your favor. A good rate and credit score will get you far, couple that with a great lender to get you ahead. The sun is shinning on you today! #Blessings
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