How to Finance a New Home

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A very happy change is coming to a member of my family.  The purchase of a new home!  Not only will there be a new year to welcome, a new address and neighborhood is coming into the mix.  Have you been looking for a new place to call your own?  If you are considering buying a new home, you have several different options for getting a home loan. With a little research you can find the perfect loan for you. Some of the most common home loans are:

Federal Housing Administration (FHA) Loan

The FHA will insure certain home loans in the event that the borrower cannot repay it. For this type of loan, you’ll give a lower down payment than for a traditional bank mortgage. Your down payment may be only 3.5 percent, which is great compared to the usual 20 percent. Along with this benefit, it is also easier to qualify for an FHA loan than for another type of loan. You can also use an FHA loan for refinancing even if you don’t have a stellar credit rating.

Conventional Home Loans

There are two types of conventional mortgages including the fixed-rate and the variable-rate. Each of these options has advantages and disadvantages, and a loan advisor can tell you which the best is for you.

A fixed-rate loan has a fixed rate of interest that does not change even if interest rates for other loans change. This means, if the interest rate goes up, you still pay your lower fixed-rate. You have a predictable payment every month. This is the best option if the loan can be secured at a low interest rate and if you plan to keep your home for more than five years. It is also possible to get refinancing to change a variable-rate loan to a fixed-rate loan if interest rates are lower than when you secured your fixed-rate loan.

The interest rate for a variable-rate loan will go up and down as interest rates change. Also called adjustable-rate mortgages (ARM), they usually start at a low interest rate, often lower than a fixed-rate loan. As the interest rates chance, your monthly payment will also change. This may be a good option of you plan to sell your house within the next five years or expect interest rates to significantly drop.

Loans for Veterans

The Department of Veterans Affairs (VA) gives home loans to veterans with no down payment. They are easy to qualify for and are usually quickly approved. They can also be fixed-rate or ARM loans.

There are several options that make buying a home easier than ever. You can discuss your financial situation with an expert on loans and find the right one for you.  And soon you could hear – Welcome Home! :->

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