Buying your first home can be very exciting. The moment you have been waiting for is finally here! Understanding your options when it comes to purchasing a house may not seem as exciting, but it’s what will help get you one step closer to your dream home. Here are a few questions to consider:
There are many, many loan options available to homebuyers but today we’ll go over two of the most popular loans that we typically deal with.
A conventional loan is a loan that is backed by Fannie Mae or Freddie Mac. Conventional loans are typically less expensive than FHA or VA loans. Conventional loans are also the most common type of home loan. They require a 20% down payment and have lower credit score requirements than FHA or VA loans.
FHA loans are administered by the Federal Housing Administration, a division of the U.S. Department of Housing and Urban Development. The FHA was created in 1934 to help Americans achieve the dream of homeownership. FHA loans are designed to be more affordable than conventional loans and are more popular with first-time homebuyers and those with modest incomes.
Remember, these are just two of the many loan options that are available to homeowners! There are all kinds of options available for every unique situation and family.
If you google this question, the responses will likely be that you need 20-25% of the total home cost. However, we have plenty of options that can reduce the down payment amount. There are occasions when someone wants to use a 401k or IRA to pay for their home. 401(k)s are not all that different from IRAs when it comes to their ability to be used in a down payment. If you are looking to purchase a home with a mortgage, then you can use the money in your 401(k) or IRA, but you will have to pay taxes on those funds.
Closing costs are fees and additional expenses beyond the down payment that are associated with the purchase of a home. These extra costs are usually around 3-5% of the loan amount, and are typically composed of things like loan origination fees, appraisal fees, title insurance, taxes and more. Depending on the type of loan you get, your closing costs can sometimes be rolled into your mortgage.
Remember, we are here to help you! Feel free to contact us with any questions or concerns regarding your current or potential home loan.