FHA and VA Loans
Loans from Your Uncle Sam
There's more than one way to finance your home purchase – in fact, there are thousands! Understanding who has loan products and how they can help you will make your home-buying process much easier. Learn about the advantages of government-backed Veteran’s Administration (VA) and Federal Housing Administration (FHA) loans. Many first-time buyers choose them because they require little or no down payment for qualified buyers.
Veteran's Administration (VA) Loans
Qualified veterans including Reserves and National Guards, can take out loans with up to 100% financing for loan amounts up to the conforming loan limit (currently $453,100) – with no down payment – and still get flexible underwriting guidelines. Closing costs are regulated. Plus, VA-guaranteed loans are assumable and can be combined with second mortgages and taken on by qualified future buyers. VA loans also don’t have Private Mortgage Insurance (PMI). But the best part might just be that payments are fixed for the entire loan term so you won't have to worry about interest rate increases.
Federal Housing Administration (FHA) Loans
While the Federal Housing Administration (FHA) doesn't technically make loans, it does make getting them easier. The FHA insures loans, which can encourage lenders to offer more favorable terms. That's because the insurance protects lenders against potential losses by paying the lender if a homeowner defaults. And with an FHA loan, down payments can be as low as 3.5%.
The only requirement is showing sufficient monthly income to pay the mortgage and satisfactory credit, but remember that the FHA charges an upfront Mortgage Insurance Premium similar to Private Mortgage Insurance (PMI). However, this premium can be financed as part of the mortgage, so you don't have to pay it upfront, or paid at Closing. You can also pay a one-time charge (discount points) at closing to help get a lower percentage rate. FHA loans are often assumable too.
With so many loan options, you want to make sure you find the one that best meets your needs. And working with your Gloria Nilson & Co. Real Estate agent and a mortgage consultant will help you understand the different options and make the best choice.
Source: Gloria Nilson & Co.
June 27, 2019