Types of Loans

Conventional Financing

This is what is commonly know as your basic, stock loan. Conventional financing has many term options, but traditionally, a 30-year term or a 15-year term is what most people will choose. Some of the advantages of choosing conventional financing are as follows:

1. A fixed interest rate that does not change over time.
2. A low down payment option of 5% and sometimes 3% of your purchase price.
3. If you decide to put 20% down or more on a home, you do not need to pay mortgage insurance or PMI (Private Mortgage Insurance). With FHA financing, no matter how much of a down payment you choose, you must pay mortgage insurance on your loan.
4. Private mortgage insurance is often lower than FHA mortgage insurance. This is based on your credit score and the amount you use for your down payment. The more you put down, the lower your mortgage insurance will cost you.
5. With conventional financing, if you decide not to put 20% down and you have mortgage insurance, the mortgage insurance will eventually go away over time. You can also look to remove it more quickly if your loan to value reaches 75% and a minimum of two years have passed since you received your loan. You can also look to refinance your home at an 80% loan to value or lower to remove the mortgage insurance. With FHA financing, regardless of time or loan to value, the mortgage insurance will never go away. You must refinance into a conventional loan to remove the mortgage insurance if you currently have an FHA loan.
6. Conventional loans do not have any additional finance charges associated with them. FHA charges 1.75% of your purchase price to borrower their money. They add this into your loan vs make you pay it up front. VA charges you based on the number of times you use VA financing. Conventional does not have a charge to borrower their money other than the interest rate.
7. Conventional loans are used to purchase second homes and investment properties. FHA and VA do not allow this.
8. They accept gift funds from family for your down payment.

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FHA Financing

Many people think FHA stands for First-time Homebuyers Association. It doesn’t. FHA stands for Federal Housing Administration. Why is this important? Because FHA does not require you to be a first time home buyer to use their services. FHA will also refinance your current mortgage and they offer cash-out financing on your current home.

Some advantages of choosing an FHA loan are as follows:

1. Lower interest rate. FHA offers fantastic interest rates.
2. They will not only accept fair to bad credit (580 credit score and above), but they also will give you a tremendous rate with a low credit score. Conventional loans will charge you massive fees for a low credit score. FHA will charge you a very similar rate as they would someone with a good to excellent credit score. There is a difference, but the difference is massive with conventional vs subtle with FHA.
3. They only require you to put 3.5% of your purchase price for a down payment.
4. They finance all types of properties, even duplex’s and 4 plex’s. As long as you live in one of the units, they will finance it. They will also help you rebuild damaged homes and let you finance it.
5. They will allow your family to “gift” your down payment, meaning they can basically pay for your home for you.

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VA Financing

The VA loan is a fantastic loan for our active and retired military. In some cases, this benefit is extended to our members in the reserves as well. This loan is only offered to US veterans in any of the armed services. You can not qualify if you are a military veteran from another country. There are many benefits to VA financing. Here are a few:

1. Zero percent down. That is right. The VA loan offers Zero percent financing. You can literally purchase your home with no money down. You can also ask us how to structure your purchase price offer and loan to make a truly free purchase. You won’t spend any money in some cases.
2. No mortgage insurance even when you don’t invest any money for a down payment. Even with zero down, you do not have to pay mortgage insurance.
3. Very competitive interest rates, in most cases better than conventional interest rates.
4. They will take low credit scores, in most cases 600 or better.
5. They will finance all types of properties, condos, duplexes, etc. as long as it is your primary residence.
6. If you have a VA disability, they will waive their funding fee. This is determined by the VA, not the lender.
7. They will finance up to $1,000,000.00. Your time in the military and pay history will dictate your maximum loan amount you qualify for.
8. VA also offers refinancing and cash out financing if you currently have a VA loan. So its not just used for purchases
9. A VA loan is assumable, meaning you can pass your mortgage to another qualified VA buyer without them having to get a new loan. They can simply take over your current loan. This can be a very attractive offer when selling your home.

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