Loan Surfer Home Buyer Guide

GETTING YOUR MORTGAGE THE RIGHT MORTGAGE FOR YOU When it comes to home financing, there’s no one-size-fits-all approach. There are a variety of loan programs available to meet your specific financial situation, and you should talk to your lender about which one is right for you.

LOAN TYPES: CONVENTIONAL VS. GOVERNMENT SPONSORED Conventional Loans: With a conventional loan, the lender assumes the risk for lending you money. As a result, conventional loans have more stringent credit requirements and higher down payment requirements. Jumbo: Jumbo loans are those that exceed the conforming loan limits. Interest rates are usually higher on jumbo loans because they represent greater risk to the lender. There may also be stricter credit standards and underwriting requirements. Government-sponsored loans: With a government-sponsored loan, the government backs the loan, or assumes the risk for lending you money. They typically have lower credit and down payment requirements to make it easier for you to obtain a mortgage. FHA: Federal Housing Administration (FHA) loans allow you to purchase a home with as little as 3.5% down. Because of the low down payment, borrowers are required to pay a mortgage insurance premium (MIP) on top of their monthly payment. VA: Backed by the U.S. Department of Veterans Affairs, VA loans require no down payment (100% financing) and no mortgage insurance. They are available to eligible veterans, active duty members, reservists, National Guard members, and surviving spouses. USDA: Backed by the U.S. Department of Agriculture, USDA loans are available for homes in eligible rural areas. While USDA loans do not require a down payment, they do require mortgage insurance. Conforming: Conforming loans are those that adhere to loan limits set by the Federal Housing Finance Agency.

What type of loan is right for you? Fixed Rate: A fixed rate loan provides a fixed rate throughout the life of the loan, meaning the rate will not change 10, 20, or 30 years from now. A fixed rate loan may be the better choice if you want stable payments and plan to live in your home long-term. ARM: With adjustable rate mortgages (ARMs), the interest rate will fluctuate over time. ARMs can either go up or down, which will affect your monthly payment. An ARM may be a good option if you only plan to live in your home for a few years.

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