So, you want to buy a new home? Congratulations, welcome to the first step.
Purchasing a new home is an exciting and overwhelming experience. Exciting because it's a new home; overwhelming because figuring out the available financing options can be an uphill task.
You haveplenty of loan options in Utah. Do you know which one suits you?
It starts with research. Learn what you can, set up a budget, and look for a down payment. Then take time to review your credit history to increase your eligibility for a home loan. With that, a homeowner will have a better idea of a financing option that best suits their budget and needs.
Here are the common types of home loans to keep in mind:
Jumbo Mortgages
These are conventional home loans that come with non-conforming loan limits. That means the price of a property can exceed the federal loan limit. According to a report by the U.S. Federal Housing Agency, $453,100 is the maximum conforming limit for a house in the United States. The price, however, can rise to $69,650 in high-cost areas. Qualifying for Jumbo mortgages require detailed documentation and are common in high-cost neighborhoods.
Conventional Mortgages
Conventional home loans refer to financing options that the federal government does not insure. Traditional home loans are categorized into non-conforming and conforming loans. A conforming mortgage means that the home loan falls within limits set by the government agencies. On the other hand, non-conforming home loans are the ones that do not meet these standards. An example of a non-conforming loan is a jumbo mortgage. Lenders require home buyers who make a down payment that is less than 20 percent of the value of the house to pay for private mortgage insurance coverage.
Government-Insured Home Loans
While the US government does not issue home loans, it plays an integral role in helping Americans secure affordable mortgages. Three government agencies back mortgages in the United States, which include VA loans, USDA loans, and FHA loans. Government-insured loans help people who cannot make a large down payment own a home. You need a score of 580 to qualify for a government-insured loan.
Fixed-Rate Mortgages
These are home loans that maintain the same interest rate over the life of a mortgage. With a fixed-rate mortgage, it means your monthly payment will remain the same. However, their repayment period can vary between 15, 20, to 30 years. Fixed-rate home loans allow homeowners to budget for their monthly expenses, given that their interest rate is fixed.
Homebuyers must be comfortable with a certain level of risk before opting for a mortgage. A home loan can help a homebuyer who has no plans of staying in their house beyond a few years save on interest payments. Homebuyers have access to many types of home loans, depending on their financial status and needs.
The perfect home loan for you depends on your eligibility for a government-insured or conventional mortgage. You can still speed up your loan repayment by getting a home refinancing loan. Refinancing options are available for homeowners interested in reducing your interest rate and lowering your monthly payments. You can consult a financial advisor for assistance in choosing the best home financing option.
