One the first steps a potential home buyer should take when considering buying a property is to speak with a licensed mortgage professional to discuss financing options and determine how much he or she is qualified to borrow. A general rule of thumb can be the “28/36 rule”. This calculation can help you estimate what you may be able to borrow. You will want to make sure that your monthly housing debt obligations (principal, interest, taxes, insurance, HOA dues, etc) do not exceed 28% of your gross monthly income. And, your total monthly payments (housing, credit cards, etc) should not exceed 38% of your gross monthly income. Keep in mind that this is a general guideline and lenders will consider multiple aspects of your financial picture (i.e. credit scores, assets, liabilities, employment, etc) when determining whether they will execute the loan or not.
There are tons of great mortgage financing options in the marketplace ranging from low money down FHA loans to jumbo mortgage products designed for loan amounts which exceed an area’s conforming loan limits. This blog will help you learn about some of the financing solutions at your disposal. Always be sure to consult with a licensed, reputable mortgage advisor before making any financial decisions. It may also may sense to speak with your financial advisor and tax professional before moving forward.
Here is a list of some of the most popular residential mortgage programs in today’s marketplace. You can follow the various links to learn more about the various products.
Conforming Fixed Rate Mortgages – Mortgage programs where the monthly principal and interest payment remain consistent through the life of the loan. Terms tend to include the following options: 40 year mortgages, 30 year home loans, 25 year mortgages, 20 year mortgages, 15 year home loans, and 10 year fixed rate mortgages.
Adjustable Rate Loans – Adjustable rate mortgages (aka ARMs) have a introductory period where there is often a lower introductory rate than what is available through a fixed rate loan. These introductory rate periods may range from 10 years down to one month, depending upon the ARM product. After the introductory period ends, the loans then begin to adjust up or down based upon the loans’ margin, caps, and the index which the loan is tied to. The loans are consider more risky than their fixed rate counter parts.
FHA Mortgages – FHA loans ahve become increasingly popular in recent years as other low money down financing solutions have become scrapped. Just as far back as 2005, there were tons of low and zero down financing programs available from just about every major lender in the United States. Today, FHA loans are the most popular low money financing home loan solution in the marketplace. These loans insured by the Federal Housing Administration and are offered through FHA approved mortgage lenders.
VA Loans – VA mortgages are available to eligible active duty military personnel, veterans, and qualifying family members. There are several potential benefits for VA loans including the ability to put no money down, refinancing without many of the hassles of conventional refinancing, and VA loans can be assumable.
Jumbo Mortgages – Non-conforming jumbo loans are designed for borrowers seeking financial for loan amount which exceed the conforming loan limits in a given area. High cost areas such as Southern California may have a higher conforming loan limit than say, rural Arkansas.
USDA Rural Housing Loans – Designed to help lower income individuals in rural area of the country. This no money down mortgage program is run by the United State Department of Agriculture. Income limits apply.
203K Loans (Rehab Loans) – 203K loans are FHA mortgage programs which can be used to aide in the “uncomplicated” rehabilitation of a home where plans, consultants, and architects are not needed. 203K can be used to purchase or refinance homes while making the desired improvements.
Manufactured Home Loans – The number of lenders offering mobile home loans has dwindled in recent years. There are typically two types of lenders. One…those who finance homes on leased land in trailer parks, and two…those who finance manufactured homes on owned land.
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