Navigating the world of home loans is like navigating through a misty mountainside terrain with no map. It doesn’t have to be that way. Here, we break down the different options you have as you happily go house-hunting.
Conventional Home Loans
These are probably the ones you think of when you think of buying a home. Though not government-insured, these loans do meet the standards provided by Fannie Mae and Freddie Mac. These require a down payment, but they are absolutely perfect for real estate investors since you do not have to occupy the property you purchase with a conventional home loan. Even as a property investor, though, you will still need to buy mortgage insurance.
Though you may not have heard of them, bridging loans also present themselves as great options for property investors. They help investors quickly turn a piece of property so that they can continue filling their portfolio with more properties as they invest on the up and up. These very specific types of loans tend to become most popular around the beginning of the year, so plan accordingly. (It is also worth noting that your options and your resources are a lot different if you are a property investor and not a home buyer. If those things apply to you, then your loan options are different entirely.)
USDA Home Loans
This type of home loan, though sponsored by the US Department of Agriculture, doesn’t just apply to those who work in the agricultural industry anymore. In fact, over 95% of Americans are eligible for USDA Home Loans. Check your credit score before applying for this type of government-insured, no money down mortgage, because you need a score of 640 or higher to qualify. Although you will need mortgage insurance, there are low rates for said insurance with this type of loan.
As a veteran, I thank you for serving our country. For your service, there are also different home-buying resources available for you to use. These types of loans are special in that they don’t require mortgage insurance, your can get 100% financing, and, of course, no need for a down payment.You can save as much as $2,000 per year on mortgage insurance with this type of loan.
If you plan on making an expensive home purchase, then this is the loan for you! This specific loan is also through private companies and requires mortgage insurance and sometimes a 25% down payment, but if you don’t qualify for a conventional loan because of the high cost of your house purchase, then this is the loan for you. (Pssst. There are even loans called Super Jumbo Loans if the home you’re purchasing has a value that exceeds one million dollars. If you want one of those, you’ll have to do some research on your own, because just thinking about that much money makes me dizzy.)
Hopefully, you can use this article as a map through the sometimes-frightening landscape of home loans. It is worth noting that some of these loans may not be available in your area or they may not be available to you because of your credit score, so it is important to discuss your options first with your banker and your realtor before making a decision. Happy house hunting!