Financing Options

 

You have made the decision to buy a house – GREAT!  Don’t panic- we understand how easy it is to get frustrated and confused when you start looking into all the financing options that are available these days. The good news is you don’t have to spend hours reading and learning all the ins and outs of real estate and finance. The Menas Real Estate team is here to help you navigate this process. We’ve broken down the main ideas to consider when looking for a mortgage loan.

Conventional Loans

  1. Fixed rate mortgage: not insured or guaranteed by the federal government.
  2. Approval based on credit score, down payment and income.
  3. Harder to obtain approval, but can help when purchasing private mortgage insurance.
  4. Conforming conventional loans line-up with guidelines set forth by stockholder owned companies like Freddie Mac or Fannie Mae.

FHA Loans

  1. Easier to qualify for than a conventional loan, especially if you are a first time home buyer.
  2. Usually require lower down payment than a conventional loan
  3. More relaxed credit requirements and possibly lower upfront loan costs.

VA Loans

  1. While the VA does not personally provide these type of loans, it does guarantee the loan for those who meet their qualifications.
  2. For veterans and service members, these loans are much easier to get approved for and in some cases, require no down payment.  
  3. Pre-approval (certificate of eligibility) is required from the VA before applying for a loan.
  4. Loans are sponsored by local and state agencies and governments.  

When it comes to interest rates, many wonder whether to get an adjustable rate or a fixed rate.

In reality, that can only be answered when one is considering their own unique family needs. There is not one correct answer that will fit for everyone but here are some important things to consider:

  1. Fixed Rate: determined when you take out the loan and with agreement terms that will not change while you own that particular loan.
  2. With a Fixed Rate, your payment will never go up or down, which allows for more household budget control.
  3. Adjustable Interest Rate: can change from year to year, based on the federal credit index and lending rates.  
  4. With an Adjustable Rate, your monthly payment could change every year or even month – not an ideal situation for families on strict monthly budgets.