Whether you’re purchasing a new home or refinancing your current house, there are mortgage loans out there for everybody.
However, choosing the right mortgage option can be tricky if you don’t know what to look for in a loan or lender. Fortunately, we created this guide to help you determine which Supreme Lending loan option is right for your situation.
If you’re finally ready to buy a new house but aren’t sure where to start, look at all your financing options below to see which might be the best fit.
Traditional loans are one of the most common loans because they can be used regardless of the type of home that is being bought or refinanced. They’re given out by mortgage lenders such as Supreme Lending, and you have the option to choose between Conventional or Jumbo.
A conventional loan is the most commonly used loan for mortgaging your home. They’re characterized by fees and interest rates determined by the lender. Because of this, fees are generally lower than other options, and rates can be lower depending on the borrower’s credit score.
A jumbo loan is used to purchase homes costing greater than $453,100. These loans are used when the borrower’s credit score exceeds 700, and they have the means to provide a larger down payment.
These can be especially beneficial when looking to purchase a large single-family home, such as when you’re upgrading to a bigger house.
Federal loans are great options because the government guarantees them. While there are several types of government mortgage loans, these are the most common.
A VA loan is given to a borrower by a certified lender and backed by the office of Veterans Affairs. This loan is specifically for former military members, reservists, and people in active service.
VA loans offer no down payment and a limit on closing costs, appraisal fees, and origination fees. In addition to that, the VA does not require a private MIP, which can save you money down the line.
The FHA is the Federal Housing Administration. While they are not the party that lends the money, this government department insures loans issued to approved lenders (like us).
These loans are popular choices for borrowers with a low to moderate income because they have lower interest rates, down payments, and closing costs. The FHA loan also doesn’t automatically disqualify you for the loan if you’ve filed for bankruptcy.
And when it comes to how much you can borrow, the loan limits are lower than with a conventional loan. This means you’ll be looking at less expensive homes, though your budget should already predetermine if this is a factor to consider.
The process of amortization can be an attractive option for people who like to plan and know precisely how much they will need to spend every month. The word amortization comes from a root meaning “to kill,” as in killing off the loan after a fixed period and payment schedule.
The interest on an adjustable amortized loan will be incrementally adjusted based on an ARM index. These can be beneficial because, initially, they provide you with a lower monthly payment.
Plus, if rates improve, your rate and payment could also go down! Applying for an adjustable-rate loan can also help qualify you for a greater loan amount and allow you to pay a smaller payment over a shorter period of time.
A fixed-rate is just what it sounds like; a fixed rate you pay every month for a set number of months. It includes both interest and your principal balance; however, you pay most of the interest off at the beginning while paying the principal off after.
It can be beneficial because if interest rates increase, you are not subject to those changes and instead still only pay your fixed rate. Yet, you still have the opportunity to refinance should interest rates go down.
A specialty loan is given to those in situations that may require different assistance than with traditional or government loan routes. There are a few situations that this may be necessary.
First-Time Home Buyer Programs
As a first-time homebuyer, you are at an advantage to participate in a variety of different loan programs not available to other borrowers.
You can ask for down payment assistance, grants, tax credits, or closing assistance, depending on your needs. With this loan, you could pay as little as 3% down. With a grant, you must qualify depending on state and local regulations; however, they don’t have to be paid back.
These options can result in an easier qualifying process, lower payments, and even lower rates!
Supreme 100 Program
The Supreme 100 Program is basically a conventional loan, though it has no mortgage insurance and requires a 0% down payment on the home! It even includes a 1% closing cost assistance.
While it requires a 660 credit score and can only be used for a 1-unit primary residence, the loan amount covers up to $484,350 ($726,525 in high balance areas), which is a great deal to get you started in a new home.
Choosing the Right Mortgage Loan for You
Refinancing or buying a home can be a stressful process. But with help from Supreme Lending’s experienced loan officers, you don’t have to worry about how you’re going to finance your mortgage.
Whether you choose to go the traditional route, take advantage of great government options, or want an adjustable rate, Supreme Lending can provide a solution for whatever your needs are.
If you think one of these options might be right for you, contact us to get started with your loan application today!