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There isn't a single or simple answer to
this question. The right type of mortgage for you depends on many different
factors including :
Your current financial picture
How you expect your finances to change
How long you intend to keep your house
How comfortable you are with your mortgage payment changing
For example, a 15-year fixed-rate mortgage can save you many thousands of dollars in interest payments over the life of the loan, but your monthly payments will be higher. An adjustable rate mortgage may get you started with a lower monthly payment than a fixed-rate mortgage -- but your payments could get higher when the interest rate changes. The best way to find the "right" answer is to discuss your finances, your plans and financial prospects, and your preferences frankly with a mortgage professional.
In attempting to approve home buyers for the type and amount of mortgage they want, mortgage companies basically look at two key factors: the borrower's ability and willingness to repay the loan. Ability to repay the mortgage is verified by your current employment and total income. Generally speaking, mortgage companies prefer for you to have been employed at the same place for at least two years, or at least be in the same line of work for a few years.
The borrower's willingness to repay is determined by examining how the property will be used. For instance, will you be living there or just renting it out? Willingness is also closely related to how you have fulfilled previous financial commitments, thus the emphasis on the credit report or rent and utility bills.
It is important to remember that there are no rules carved in stone. Each applicant is handled on a case-by-case basis. So even if you come up a little short in one area, perhaps one of your stronger points will make up for the weak one. Everyone involved in real estate is in the business of selling homes, in one way or another. Therefore, if the loan makes sense, mortgage companies and insurers will do their best to see that you qualify.
By its very nature, mortgage insurance is an aid to affordability, because it allows families to purchase homes with less cash on hand. The industry plays a central role in helping low- and moderate-income families become homeowners.
More and more borrowers are taking advantage of low down payment mortgages and becoming homeowners with as little as 5 percent down. For more information on how you can take advantage of the benefits of a low down payment home loan with mortgage insurance, contact your local mortgage professional.
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Loan programs come in many forms
and come from many sources. Just as the loan structure, like a 30 year fixed
rate mortgage, can affect your interest rate and monthly payments, the source of
funding for your loan can also affect your rate and payments. The source of
funding can also affect the amount of your down payment and closing costs.
If you have at least 3% of the loan amount to use as a down payment, you may
consider the most common type of loan, a conventional loan. These loans consist
of conforming loans, which are secured by government sponsored entities (GSE)
such as Fannie Mae and Freddie Mac, and jumbo loans, which are funded by private
investors for loan amounts higher than the limits set by the GSE's.
Conforming loans are funded by
Fannie Mae (FNMA) and
Freddie Mac (FHLMC). These companies do not lend money directly to you, but
work with lenders across the country to offer mortgage loans to meet your needs.
As a
secondary market for mortgage loans, they purchase mortgages from lenders
and package them into securities that can be sold to investors.
If you are looking for a large loan amount to purchase or refinance your home,
you could consider a
jumbo loan, which has a higher loan amount limit than the limits set by
Fannie Mae and Freddie Mac. Because jumbo loans cannot be funded by these two
agencies, they usually carry a higher interest rate.
The federal government and other state, local and private entities have
developed programs to help you purchase a home with a
low down payment. If you are a first time homebuyer or have low to moderate
income, you may be eligible for a mortgage insured by the Department of Housing
and Urban Development (HUD) through the Federal Housing Administration (FHA).
While FHA does not make or buy loans, they insure
FHA loans so that if you default on the loan, the lender will get
reimbursed. You may be able to get an FHA loan with a low down payment of only
3% of the loan amount or less. While there are
limits to the size of FHA loans, they are generous enough to handle
moderately priced homes almost anywhere in the country.
If you are a veteran or qualify by military service or other entitlements, FHA
mortgage insurance can also be combined with a guarantee from the Veteran's
Administration. VA mortgages were created to help veterans achieve the American
dream and buy their own homes.
VA loans offer low to no down payments with many of the same benefits as an
FHA loan.
If you have
bad credit, you may not qualify for a conventional loan. In this case, you
could consider a subprime loan. Like other loans,
subprime loans come in many forms based on the terms, loan amount and loan
to value ratio you are looking for. In addition companies will look at your
credit and give you a credit grade, which will help them determine the best loan
for your situation. With less than perfect credit, you can expect to pay higher
interest rates because of the higher risk associated with making a loan to
someone with a poor credit history.
Remember:
Buying and selling a luxury home or finding that special piece of Asheville Real
Estate with Kathleen Blanchette,
a fully licensed Keller-Williams Asheville Real Estate Broker and Realtor, is a comprehensive and thoroughly professional
experience in buying and selling Asheville Real Estate throughout the Blueridge
and Smokey Mountains, where efficiency, personal regard and concierge services are
guaranteed every step of the way. Keeping the Tradition of Integrity...,
and a Reputation for Results!
Whether its a North Carolina luxury homes on your own Private Mountain Estate
in one of our uniquely designed plush Golfing Communities, Exclusive Gated Communities,
Active Adult Communities, surrounding Lake Communities, or a great Condominium,
Loft or Townhome, all of Greater Asheville and Hendersonville Luxury Homes are within reach with Kathleen Blanchette. Feel Free to browse the entire website of all available Greater Asheville Real Estate
MLS and Western North Carolina MLS,
for all Asheville Real Estate Properties, Land Acreage, Horse farms, Investment
Properties, Commercial Real Estate, New Home Plans, as well as handy relocation
and moving calculators, tips for buying and selling a house,
city and school reports, and more. Just call us when you're ready to move
ahead!
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