Homebuyers are understandably concerned about interest rates, but most homebuyers underestimate the importance of choosing the right mortgage. A loan that is customized to your needs can provide huge savings, while choosing the wrong mortgage can be very expensive.
Let's begin with a quick lesson on mortgages. You'll find links for additional information if you want to learn more.
There are three general categories of mortgages:
- VA (Veteran’s Administration)
- FHA (Federal Housing Administration)
VA loans are "guaranteed" by the Veteran's Administration for eligible veterans. The most outstanding feature of a VA loan is the ability to obtain 100% financing. A funding fee is paid to the VA at closing, and the fee may be included in the loan. The loan is assumable to subsequent buyers. The maximum VA loan amount is $333,700. If you think you qualify for a VA loan, contact a Loan Officer for assistance. For more information on VA loans, contact one of our Loan Officers.
FHA loans are insured by the Federal Housing Administration. Borrowers typically provide a small down payment, but with special associated programs the down payment can be obtained as a gift from a home advocacy non-profit association. A "Mortgage Insurance Premium" is paid to the FHA at closing, and the fee may be included in the loan. Additionally, there is a small monthly insurance premium added to the payment. The maximum loan amount for an FHA varies with location. For more information on FHA loans, contact one of our Loan Officers.
Conventional Loans are very common and are typically the most flexible. Loans amounts not exceeding $333,700 for single family homes are called "conforming" loans, while loans above $333,700 for single family homes are called "jumbo" loans, and loans greater than $1,000,000 are considered "super jumbo" loans. The down payment can be as little as 0% (with specialized financing) to as much as desired. Mortgage insurance may be required on some loans, but we have many products that do not require mortgage insurance. For more information on mortgage insurance, click here. For more information about conventional loans, contact one of our Loan Officers.