If you are looking for a mortgage with a wide selection of terms and competitive rates, conventional loans may be your answer. These loans are what most people think of when it comes to a traditional home loan. Conventional Home Loans are not part of a government-sponsored program and are instead fully funded and insured by private lenders and insurers.
BASIC CONVENTIONAL LOAN REQUIREMENTS
Ultimately, lenders individually decide who is and is not approved for a conventional loan. Borrowers should be prepared to supply at least two years of W-2’s, tax statements, bank statements and proof of cash reserves and submit to a credit report.
Clients should have good or better credit – at least a 620 or higher, and a low debt to income ratio.
For most conventional loans, a 20% down payment is required.
FHA loans are an awesome option when it comes to home financing. They have great benefits, such as a minimum of only 3.5% down payment. These non-conventional loans are secured by the Federal Housing Administration and are funded by private lenders.
BASIC FHA LOAN REQUIREMENTS
FHA loans are a much more accessible financing option with lessened requirements and added benefits such as:
550+ Credit Score
3.5% Down Payment(Compared to 20% conventional)
Fixed interest rates
The ability to have some or all closing costs covered by the seller or the lender.
If you would like to make repairs to your existing home, FHA also offers 203(k) mortgages for home repair.
The VA Loan helps service members, veterans, and eligible surviving spouses to purchase or refinance a home. Some of the key features of the VA home loan include:
• Up to 100% financing, which means NO DOWN PAYMENT required in most cases. You earned it.
• No monthly Private Mortgage Insurance (PMI) costs.
• Lower interest rates compared to other loan types.
A land loan is used to finance the purchase of a plot of land. They’re used when a buyer is interested in buying a piece of land to build a home or utilize for business purposes. If you’re interested in obtaining a land loan, the type you take out will depend on where you’re buying land and how you intend to use the land.
The three most common types of land loans are raw land loans, unimproved land loans, and improved land loans.
Raw land is known to be completely undeveloped land with no electricity, sewers or roads. If this is the type of land you’re interested in, you’ll need to apply for a raw land loan. Because it can be hard to get financing for undeveloped land, it’s important that you create a solid, detailed plan for how you want to develop the land. This will show lenders that you’re committed to the project and don’t pose as great of a risk. You can also increase your chances of qualifying if you have a large down payment and good credit. While purchasing raw land can be cheaper than developed land, raw land loans do have higher interest rates and significant down payments compared to other land loans.
Unimproved is similar to raw land, but it tends to be more developed. Sometimes unimproved land has some utilities and amenities, but typically lacks an electric meter, phone box and natural gas meter. While an unimproved land loan isn’t as risky as a raw land loan, it can still be difficult to obtain, so make sure you have a detailed plan, large down payment, and strong credit score. Because unimproved land loans aren’t the riskiest type of loan, the down payments and interest rates won’t be sky-high, but it’s common for them to be higher than other types of loan financing.
Unlike raw land and unimproved land, improved land has access to things like roads, electricity and water. Improved land is the most developed type of land, so it may be more expensive to purchase. However, interest rates and down payments for an improved land loan are lower than they are for a raw land loan or unimproved land loan. Nonetheless, it’s still important to put down a significant down payment and have a good credit score.
Land loans are obtained in the same way a buyer would obtain a mortgage loan, but unlike receiving a dollar amount assigned to the property, it can be harder to determine what the land is worth because there is no property collateral. This means that land loans are a riskier transaction for lenders, which results in higher down payments and interest rates than a typical home loan.
If you are building a home and need financing for construction there are several loan types to consider.
Construction loans are structured with interest only payments, keeping your monthly payments as low as possible.
You want to build your dream home and you need to buy the land. There are a variety of programs to help you buy land for future development. Brokers can help you in every phase of the transaction, from land acquisition through construction to your permanent loan.
Choose one of multiple Fixed Initial Rate Mortgages (FIRM’s) products with an initial fixed rate of 5 or 7 years.
This product allows you to construct and permanently finance your new single family, owner occupied primary or secondary residences with just one loan. You save money by avoiding two loan closings and the associated duplication of loan fees, closing costs, appraisals, etc. In addition, the uncertainty and interest rate risk incurred with two loans is eliminated since you are fully qualified and the interest rate is locked prior to beginning construction.
Needing to get Pre-qualified Contact one of our agents today to help you find a mortgage broker to fit your needs!