Home Loan Basics
When you first started thinking of buying a home, you probably entered a few numbers into an online mortgage calculator and were surprised by the results.
Sure, online mortgage calculators can quickly figure your monthly mortgage payment on a particular home, compare various mortgage terms and more. But you need more than a general idea of what you can possibly afford – you need the specifics.
Selecting the right loan option is key to purchasing your home, and can have a significant impact on the overall cost of your mortgage. Different kinds of loans have different requirements for approval. Which mortgage loan is a match for you?
- FHA loans offer qualified buyers lower down payments, and more relaxed credit limits. The Federal Housing Administration (FHA) – which is part of the U S Department of Housing and Urban Development – insures the loan, which makes it possible for the lender to offer you these benefits. FHA limits the loan amount based on housing affordability in your area. In Madison County, Alabama, the loan limit for a single family home is $356,362. an FHA loan is more flexible to obtain, but no matter how large the down payment, you will have to pay mortgage insurance.
- Conventional loans give the borrower more flexibility when it comes to loan amounts. They also do not require mortgage insurance if the borrower can make a down payment of 20%. Conventional loans usually require a higher credit score and more money as a down payment.
- A VA home loan was created to honor our Veterans and active-duty military personnel by assisting them with getting into a home of their own. These loans are fully backed by the U.S. government and are one of the most attractive and flexible mortgages on the market.
- A renovation home loan allows you to get the financing needed to buy a new property and the funds you need to make the renovations and/or repairs on the home, all rolled up into one monthly mortgage payment.
- A Jumbo loan, also known as a non-conforming loan, is a mortgage that is above the conforming loan limit set by the Federal Housing Finance Authority. Currently, the conforming loan limit is $548,250 for a single-family home, although this amount can increase in certain higher-priced areas.
If you are thinking of buying a home, the first step is to speak with a mortgage loan professional to assess your financial circumstances and discuss which mortgage is the best option to assist you with your short- and long-term homeownership goals.
Don’t know a mortgage loan officer? Call us! Our team can recommend a trusted local lender to assist you.