How to determine what loan program is right for you

Posted by John Skrabec on Thursday, February 7th, 2013 at 3:07pm.

With all the different programs available it’s important to determine early on in the loan process which program is right for you.  Each type of mortgage has different underwriting guidelines and down payment requirements.  Figuring out which one makes the most financial sense can be tricky. How much money you have available for the down payment can play a huge role?  Below are some of the most common:

FHA is great for first time homebuyers as the minimum investment is 3.5%.  The downside of this type of financing is the cost of Mortgage Insurance.  FHA requires both “up front MI” which can get rolled into the loan, and “monthly MI” which can get rather expensive and lower the amount that you qualify for.

VA is a great option for Veterans as it offers 100% financing and No Mortgage Insurance.  The downside of this type of loan is the VA funding Fee.  This fee various depending on the down payment amount as wells whether it’s for “first time use”, or “subsequent use”.  On a positive note this fee can be rolled into the loan.

Conventional Mortgages are great for people with good credit who can put down 5% or more.  Mortgage insurance for this type of loan is less expensive for borrowers with good credit and is completely waived at 20% down.  Credit score and down payment play a huge role with this product.

What monthly payment are you comfortable with?  This question is just as important as how much money you have to put down.  The last thing anyone wants is to hand over their entire paycheck for their mortgage payment.  An experienced Mortgage Consultant should be able to help you determine what loan amount a particular payment translates to, while keeping in mind monthly expenses such as taxes, insurance, and mortgage insurance.

With interest rates still at historic lows home prices rising, now is the time to pursue homeownership!

Thanks to Morgan Pennington for writing this article! Morgan is the Branch Manager and Senior Mortgage Consultant at Gateway Mortgage Group.  Contact Morgan at , or call him at 303-815-6655  NMLS#772290

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