There are many different types of loan programs available for those looking to purchase or refinance a home. Often, there are also several other options available within each program as well, such as the ability to choose a 15-year, 20-year, or 30-year term. While the ability to choose from several different options is a benefit, understanding all the different terms and requirements can be difficult at best.
As your Loan Officer, one of the first things I will do is talk to you about your current situation and your goals and narrow the range of products into a manageable few that are likely to best suit your needs. This makes it easier to compare the programs and evaluate their benefits so you can choose the program that will work best for you. There are three key pieces of information that guide this narrowing down process: your goals, your down payment, and your credit.
Some mortgage programs are broad in terms of their purpose. For example, many programs can be used either to purchase a home or refinance a home you currently own. Other programs, such as a renovation loan program, are designed to address specific situations. Furthermore, not all programs, broad or niche, will treat every situation the same as far as qualifying requirements or pricing.
If your goal is simply to purchase a home or refinance to a lower interest rate, then we know we can eliminate specialty products. If, however, you are looking to purchase an investment property or a fixer-upper, then we would need to start looking at a different set of mortgage programs.
Your Down Payment (or Equity Position)
The amount of money you intend to put down on your purchase or, if you are refinancing, the amount of equity you have in your home, could be a significant factor in what loan programs are not only best for you, but which programs may be available to you. If you are planning to make a down payment of less than 5% of the sale price, it is likely that there will only be a handful of programs to choose from, such as the FHA, VA, USDA, and similar programs.
Your credit history and credit scores play a significant role in the qualification and approval process. Very high credit scores will do nothing to limit the programs or terms available to you but lower scores can result in being ineligible for some loan programs or slightly higher interest rates on others.
There are several other factors to consider, of course, but these three will often point us toward those loan programs that will align with your needs. From there, we can begin to narrow down the field even more by looking deeper at your current situation and long-term goals.
For more information or to discuss your current situation and goals, do not hesitate to contact me at your convenience.