Financing Your Home Options
Are you interested in buying a home? If so, you probably already know if you will be requiring a loan or not for the purchase. With many different financing options on the market, it can be easy to get overwhelmed. While your realtor may be able to answer some basic financing questions, they will not be able to assist you with your specific financing options. You will want to speak with a Mortgage Lender or Bank. The Realty Group Team works with many lenders so you can shop around for options and find one that best suits your needs.
Prequalification vs. Preapproval
During the prequalification process, a mortgage lender gathers basic financial information and determines if you meet the credit requirements for buying a home and gives an estimate for how much you can afford. Prequalification is faster than preapproval – only taking up to a few days. However, you will eventually need to be preapproved, so if you have the time, consider skipping this step and going straight to preapproval.
The process of preapproval is more detailed. Your lender will pull credit reports and verify your income, assets, and debts. They also look over your debt-to-income ratio to determine your loan amount and an estimated down payment. Some lenders will allow you to lock-in a specific interest rate for your loan at this time. Once you are preapproved, you will know exactly what you can afford and can show sellers that you’re serious about buying.
Most Common Loan Types
Conventional loans are not insured or guaranteed by the government. They usually have stricter requirements, like a higher credit score, but are usually less expensive in the long run, if you qualify.
Federal Housing Administration (FHA) loans are loved by first-time home buyers because of their lower credit requirements, upfront loan costs, and down payment amounts. If you use a FHA loan, you will need to pay a mortgage insurance premium that will be added to your mortgage payments.
U.S. Department of Veterans Affairs (VA) loans guarantee veterans and their family’s home loans, from qualified lenders, with favorable terms. Before applying for this loan, you will need to verify eligibility with the VA.
These are only a few of the loan options available. Please consult a mortgage lender or bank to see which loan works best for you. If you would like to start the home buying process, please call or text Teresa Grant (434) 546-3202.