What is the Best Mortgage for Me?
We get asked often by clients: “What is the best mortgage for me to get.” Before that can be answered you must first decide what type of property you are purchasing. Such as, is it a:
- Primary Home
- Second Home
- Investment/Rental Property
- New Construction
- Fixer upper or Flip
Is the property a Single Family, Multi-Family, Condominium, Townhouse, Mobile Home?
You will also have to figure out how much money is needed.
Not to worry! I am here to help and there are many options available based on minimum credit and income requirements.
Conventional, also referred to as private loans, are ideal for borrowers with good to excellent credit who have the cash on-hand needed to make the required down payment. Although traditionally 20% down is required, there are now Conventional Loan program which only require 3% down available. Generally, the minimum credit score is 640 down payment options are available, although private mortgage insurance (PMI) may be required. Home buyers may borrow up to $484,350 with a minimum credit score of 620. Eligible properties include owner occupied, second home, and investment properties. Both fixed and adjustable-rate conventional loans are available.
A jumbo loan is for those borrowers seeking to purchase a home anywhere from $484,350 up to $3 million. Generally, the minimum credit score is around 680-700 and a down payment of 20% is required, but numerous programs are available that allow for lower scores and less of a down payment. Home buyer debt-to-income ratio should not exceed 43%. Eligible properties include primary residence, condos, planned unit development, and leaseholds. Both fixed and adjustable-rate jumbo loans are available.
Backed by the Federal Housing Association (FHA), are ideal for the first-time home buyer who may have a lower credit score and lack the full 20% down payment. For example, buyers may borrow up to their county loan limit, which may exceed the conventional limit of $453,100.
FHA loans often allow for down payments as low as 3%. Generally, the minimum credit score is 580. In other words, FHA offers a better interest rate for borrowers with higher credit scores. Both fixed and adjustable-rate FHA loans are available. Therefore, this product is popular with buyers working on credit issues.
Another Federal Housing Assoc. program is the FHA 203(k) is designed for those home buyers in the market for a “fixer upper.” A borrower can obtain an additional $35,000 or more in financing to pay for eligible repairs and rehabilitation to a single-family home prior to moving in. Some restrictions apply. Both flat and adjustable-rate FHA 203(k) loans are available.
Backed by the Department of Veterans Affairs, VA loans up to $484,350 or more are available to veterans, surviving spouses, and those currently serving in in our nation’s military. Thus, VA loans have some of the best features and benefits for borrowers available. They include a loan-to-value (LTV) up to 100%. Generally, the minimum credit score is 620. These loans allow Veterans to buy a home with little or no down payment, depending on their eligible entitlement.
First, you must obtain a Certificate of Eligibility (COE) which includes honorable discharge following 90 consecutive days served during wartime, 181 days to two years during peacetime, or a minimum of 6 years in the National Guard or Reserves. Surviving spouses of a service member who died in the line of duty or as the result of a service-related injury and never remarried are also eligible. Both fixed and adjustable rate VA loans are available.
Additionally, this loan is backed by the US Department of Agriculture, this federally insured loan is ideal for low and middle-income borrowers looking to purchase a primary residence in a small community or other USDA designated rural area. Borrowers are not restricted to first time homebuyers. A USDA loan requires no money down, little or no mortgage insurance and offers flexible credit terms.
Closing costs can be paid by the seller or rolled into the loan. With USDA loans, 100% of the purchase price can be financed, as well as the 1.0% Guarantee Fee charged to offset operating costs of the program. USDA are fixed-rate mortgages only Generally; the minimum credit score is 640. USDA adjustable-rate mortgages are not available.
Finally, to answer your question of “what is the best mortgage for me,” it really comes down to your goals. Everyone has different goals when the purchase or refinance a property. We are here to help you every step of the way in determining the best mortgage for you. Call me today for a free consultation.
Donna VanderPoel, 203-988-6975 or [email protected]