Most of the news about the housing market has been good in recent months; we are recovered and moving on up. That's good news for buyers and sellers, but we are now seeing more buyers entering the real estate market than before the crash. At first the market recovery was almost too quick for many buyers; prices were rising fast, but we now see a steadier market with better affordability. The other big change we see is that the tightened lending regulations are able to open up at this point. More buyers are now able to buy with low or no down payment options.
VA Loan
The Department of Veterans Affairs provides guaranteed home loans to qualified veterans. Borrowers can buy with zero down payment, and there is no mortgage insurance. The borrower does pay a funding fee, which can range from 2.15-3.3%. That funding fee can be added into the total loan amount and paid as part of the monthly payment. The funding fee is determined by the type of service the veteran gave, whether it was National Guard, Reserves, or enlisted/officer in the military and by whether or not it is the borrower's first VA loan.
The Department of Veterans Affairs provides guaranteed home loans to qualified veterans. Borrowers can buy with zero down payment, and there is no mortgage insurance. The borrower does pay a funding fee, which can range from 2.15-3.3%. That funding fee can be added into the total loan amount and paid as part of the monthly payment. The funding fee is determined by the type of service the veteran gave, whether it was National Guard, Reserves, or enlisted/officer in the military and by whether or not it is the borrower's first VA loan.
Navy Federal
Navy Federal Credit Union offers mortgages with no down payment to members of the military, Department of Defense, and their family members. The loan must be used for a primary residence, and it has a funding fee, like the VA Loan. The Navy Federal loan is only 1.75%, which gives it an edge over the VA Loan.
Navy Federal Credit Union offers mortgages with no down payment to members of the military, Department of Defense, and their family members. The loan must be used for a primary residence, and it has a funding fee, like the VA Loan. The Navy Federal loan is only 1.75%, which gives it an edge over the VA Loan.
USDA
The Department of Agriculture supplies home loans, and not just for rural areas. They usually run out of money because of the popularity of this program. USDA loans have no mortgage insurance. They charge a 2% guarantee fee upfront, and then each year the borrower is charged 0.5% of the loan balance.
The Department of Agriculture supplies home loans, and not just for rural areas. They usually run out of money because of the popularity of this program. USDA loans have no mortgage insurance. They charge a 2% guarantee fee upfront, and then each year the borrower is charged 0.5% of the loan balance.
Mortgage Insurance
For borrowers with strong credit, this option allows a down payment as low as 3%. Private mortgage insurance (PMI) has stricter requirements than an FHA Loan (below), but it can cost less over the loan term. Another advantage of this over an FHA loan is that the PMI can be cancelled once the loan is under 80% of the mortgaged home's value.
For borrowers with strong credit, this option allows a down payment as low as 3%. Private mortgage insurance (PMI) has stricter requirements than an FHA Loan (below), but it can cost less over the loan term. Another advantage of this over an FHA loan is that the PMI can be cancelled once the loan is under 80% of the mortgaged home's value.
FHA
The Federal Housing Administration offers loan products to borrowers with imperfect credit and not a lot of cash. This isn't the cheapest loan option, but it gives more buyers the opportunity to enter the real estate market, which is better for everyone. There is a premium of 1.75% charged at the start of the loan, and if the borrower paid the minimum down payment (3.5%), there is also an annual premium of 1.25%. This makes for a higher monthly payment on a similar property to a conventional loan, so borrowers' affordability is lowered in comparison.
The Federal Housing Administration offers loan products to borrowers with imperfect credit and not a lot of cash. This isn't the cheapest loan option, but it gives more buyers the opportunity to enter the real estate market, which is better for everyone. There is a premium of 1.75% charged at the start of the loan, and if the borrower paid the minimum down payment (3.5%), there is also an annual premium of 1.25%. This makes for a higher monthly payment on a similar property to a conventional loan, so borrowers' affordability is lowered in comparison.
No matter what your credit situation and down payment ability is, it is crucial to talk to a qualified mortgage professional before beginning your home search. Contact Preferred Realty Partners today for some great recommendations and to start your home search.
Originally posted on www.sarahknobbs.com.
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