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Buying a home is a major financial decision, but it doesn’t have to be a far away dream. Home loan programs exist to make homeownership an achievable reality! With so many different qualifications, requirements, and benefits, how do you successfully navigate what mortgage program is best for you?
Ensuring your finances are in order is important as they will be examined throughout the mortgage process. Be sure your credit is in good standing before you apply by paying down debts, making payments on time, and reviewing your credit report at least once a year.
A home affordability calculator will give you an idea of the home price and monthly costs you can afford based on your income, down payment, and your monthly debt. Your home affordability is also affected by your DTI, or debt-to-income ratio. This metric is used by mortgage lenders to determine your ability to pay your monthly mortgage payments based on your income and debt.
A loan term is the defined length of the loan, or the amount of time it takes for a loan to be paid off completely. Mortgage loans are typically given in term lengths of 10, 15, or 30 years.
Your loan term length will impact your monthly payments and the amount of interest you pay. With a shorter length loan, a borrower can pay the principal of their mortgage quickly with lower interest over the life of the loan but will have higher monthly payments. Longer length loans allow for lower monthly payments but will have higher interest rates.
Your Loan Originator will also walk you through the benefits of loan terms to help you determine what’s best for your financial situation.
Your interest rate is the price you pay to borrow money. Each interest rate is determined by a mix of factors, some of which you can control and others that you can’t. Interest rates fall into two different types: fixed rate and adjustable rate.
The best option for you will depend on your financial and homeownership goals. A fixed interest rate is locked in for the length of the loan and ensures your monthly payments will remain consistent. An adjustable interest rate stays locked for a few years before freely moving up or down. This has the potential to increase or decrease your monthly payments.
Conventional loans are the most common type of mortgage. Conventional programs are excellent for borrowers who can make a large down payment and have a strong credit history. They tend to close faster than other loan programs because of their lower chances of requested repairs.
FHA loans are great financing solutions for homebuyers who may not have perfect credit or may be lacking a larger down payment and closing costs. VA loans offer no down payment and are available for qualifying military veterans, active service members, and their spouses. USDA loans are available for homebuyers looking to live in suburban or rural areas that are in a USDA eligible area. There are zero down payment options, lenient credit score requirements, and can be used for first-time or repeat homebuyers.
Jumbo programs are ideal for the purchase of a luxury home or a home in a high-cost area. Jumbo mortgages are available for primary residences, second homes, and investment properties.
Using a renovation program to purchase a home that requires repairs, reconstruction, or updates allows you to roll the home’s renovation costs and purchase into one loan. This simplifies the process and gets you into your home faster! We offer a variety of renovation options depending on the scope and type of project. Customize your dream property without the hassle ofclosing two loans!
Homestead offers numerous specialty programs that are available for specific situations or areas. These programs are meant to give you an advantage over the competition and help your offer stand out. Our specialty programs are just some of the ways we work hard every day to make homeownership possible.
If you’ve been waiting for a sign that home financing is within your reach, this is it! To learn more about how Homestead Funding can help you achieve homeownership, contact us today.
Homestead Funding offers exceptional customer service and a convenient mortgage process. Whatever your financing needs, our goal is to exceed your expectations.