There are plenty of home loan options for first-time buyers. It is crucial to choose the correct one for you. Every first time home buyer has their own unique set of criteria, their own objectives and financial background. Each type of home loan has different criteria for approval, in addition to everything else it is key that you apply for the type of loan you will most likely be approved for.
It will be well worth your time and energy to do some homework, starting with more information about the different types of home loans available to you.
These are standard loan programs that follow set guidelines, with fixed term lengths and rates of interest and no special features such as low down payment options. Typically, with a good credit score and proper documentation, approval for a conventional loan is straight forward. These loans are a popular choice for people who like to know what their monthly payments will be for the next 20 or 30 years.
The adjustable rate mortgage or variable rate mortgage has a the rate of interest that changes periodically over the life time of the mortgage. The rate of interest may be fixed initially, then fluctuate monthly or yearly. The interest rate may increase or decrease and monthly repayments reflect those changes. This type of mortgage is popular with those who like to take advantage of low interest payments when the interest rate is low, however no on knows what the interest rates will be at any given time in the future!
A Federal Housing Administration (FHA) loan can be particularly attractive to first time home buyers that do not have fantastic credit scores, have a high debt to income ratio, or can only make a small down payment. FHA home loans are well suited for low income first time home buyers and those with college loans, car payments, and credit card balances.
As the name suggests, the Rural Home Loan or Direct Loan Program is administered by the US Department of Agriculture. People eligible for these loans must be classifiable as low income, be willing to assume and have the ability to repay the loan, be without safe, sanitary and decent housing and not be able to obtain a loan from another source. Additionally properties have eligibility requirements including, being 2,000 square feet or less, being located in a rural area, and not designed for income producing activities. Interestingly, although USDA rural home loans can only be applied to primary residential properties, they can be used to renovate, repair, or relocate a home as well as purchase and prepare a site for a new build. This type of loan is particularly useful for low income home buyers in economically depressed rural areas.
A mortgage loan program guaranteed by the US Department of Veterans Affairs are specifically for service members and their surviving families. These loans aim to help reduce the financial stress of purchasing a home for active service members, veterans, as well as reservists, National Guard members and the spouses of military members who died on active duty. You do not have to be a first time home buyer to qualify for a VA home loan, but the home must be the primary residence. Additional benefits include, no down payment is required, VA charges can be rolled into the loan or paid by the seller, closing costs can be paid by the seller, and although there is a limit on loan amounts, 100% financing is an option.
With this information under your belt, you may feel empowered or overwhelmed. Drew Mortgage Associates, a leading mortgage company in Boston, and approved by the FHA, VA, USDA as well as HUD can guide you through the entire mortgage loan application process. They will take the time to understand your objectives, financial situation, and which loan option is right for you. Drew Mortgage Associates will make sure that you qualify for and receive the loan you apply for.