What to know about Loan Options

LOAN OPTIONS

WHAT TO KNOW

Determining how long you will live in the home may help determine whether to choose a fixed interest rate or an adjustable. According to a 2011 study conducted by the American Housing Survey and published by the National Association of Home Builders, the average buyer is expected to stay in a single-family house 13 years before moving. Life changes such as expanding family, job change, homeowners age (younger homeowners tend to upgrade earlier than older homeowners) all play a part in how long a buyer will stay in a home. 

ADJUSTABLE

  • After initial fixed period, the rate will increase or decrease based on  the market for that day; your payment will also adjust accordingly
     

  • Best option for those looking for
    short term commitment, generally less than 5 years

     

  • Generally has a lower interest rate to start
     

  • Typically offers an initial fixed period of 5,7 or 10 years and will adjust with the market index.

Adjustable Rate Mortgage explained

RATE TYPES

FIXED

  • Interest rate stays the same during
    the entire term of the loan

     

  • Your payment remains the same, making it easier to budget monthly expenses
     

  • Best option for those planning to stay in the home long term, generally longer than 5 years
     

  • This program generally has a higher interest rate and 15, 20 or 30 year term.

Fixed Rate Mortgage explained

LOAN PROGRAMS

Down payment, credit worthiness, debt-to-income ratios and other factors can play a part in determining what loan type fits you best. You loan officer will go over which loan options are available to you and provide any alternative options to consider. 

CL

Ideal for borrowers with good or excellent credit. Down Payment as low as 3%, no PMI when 20%  down payment is utilized. Debt -to- income ratios are more conservative. 

CONVENTIONAL LOAN

FHA LOAN

Federal Housing Administration Mortgages are for borrower with lower credit scores. Down payment of 3.5%. A bona-fide gift of funds may be used toward down payment.  Debt- to- income ratios are typically more flexible than conventional. MIP required regardless of amount of down payment.  

FHA

FHA

203k

This loan is designed for a borrower looking to purchase (or refinance) a home that may need repairs or renovation. One loan one closing. Typically, takes longer than a standard loan to close because they are more complex and require additional criteria. 

FHA 203k LOAN

VA LOAN

Designed for Veterans, Services Members and select Military Spouses. 100% Financing (zero down payment). No PMI and qualifications are a little less stringent, making these loans easier to obtain.

VA

USDA LOAN

100% Financing (zero down payment) offered by the U.S Department of Agriculture. Typically, in less populated or rural areas of the country (property location eligibility can be determined by clicking here). No PMI is required on USDA loans. 

USDA

JUMBO LOAN

Generally used to buy a luxury or higher priced home, or a property in an area with higher home values. These homes typically exceed conforming loan limits set by the Federal Housing Finance Agency in your county. Generally, requires a higher down payment of 10% or more. Credit and Debt-to-income ratios may be more restrictive.

JL