As I’ve talked about recently, now has never been a better time for first time home buyers to get into a home.  However, if you are a first time home buyer, you are probably overwhelmed by the many different financing options available to you.  If you take the time to research the basics of obtaining financing for a home, you can save a ton of time and a ton of money.

There are several different loan types that a person can look into.  The first type of loan is a traditional Conventional Loan.  Conventional loans are fixed rate mortgages that are not backed or insured by the federal government.  These types of loans can be difficult to obtain because of their strict requirements when it comes to down payment, your credit score, your income, and costs like private mortgage insurance.

Conventional loans are either conforming loans or non conforming loans.  A conforming loan complies with guidelines that are set by Freddie Mac or Fannie Mae.  Both of these companies are owned by stockholders and they create guidelines for mortgage lending.  One of these guidelines is the loan limit of $417,000 for single family homes (like I talked about in my last post).  Non conforming loans are usually provided by portfolio lenders and have a set of guidelines that are regulated by a particular lending institution.

FHA Loans (My personal favorite, if you can’t tell) are backed by the federal government.  An FHA home loan offers lower down payment requirements and are much easier to obtain than traditional conventional loans.  They are perfect for first time home buyers not only because of the low down payment option, but flexible credit requirements and they look at your whole financial situation to determine if you qualify.

VA Loans are unique because they are only available to veterans and The U.S. Department of Veterans Affairs guarantees all VA loans.  The VA is not the one who lends the money to borrowers, instead, they guarantee mortgages made by approved lenders.  These types of loans make it easy for veterans to obtain home loans with no down payment and they are so much easier to obtain than any other type of loan.  Before you apply for your mortgage, you need to request eligibility from the VA.  If you are accepted they will send you a qualifying certificate.

If you are  first time home buyer, I hope that this has been enlightening and very informational.  If you are ready to pursue financing for your mortgage needs, please contact us right now and we can get started!

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