Purchasing a home can seem like an overwhelming process with so many different mortgage programs available. Over the years, the number of loan programs available has grown to meet the wide variety of borrower needs and circumstances. At Real Estate Funding we work to educate our clients on the options they have so that they can select the best mortgage for their individual needs. With extensive knowledge of the Alabama real estate market, we are able to offer competitive rates, excellent terms, and fast approvals on a number of home purchase loans. Below are some common home purchase loan programs that are available to Alabama residents.
Conventional Loans – Any purchase loan not guaranteed or backed by the federal government is classified as a conventional loan. Since these loans do not offer lenders the same level of protection as government-backed loans, they can sometimes be a bit more difficult to qualify for.
FHA Loans – An FHA loan is a mortgage insured by the Federal Housing Administration (FHA). By guaranteeing these loans, the FHA protects lenders in the event of borrower default. This protection allows FHA loans to be offered with more relaxed credit and income requirements than other loans making them quite popular among first-time home buyers.
VA Loans – VA loans are mortgages guaranteed by The U.S. Department of Veterans Affairs. These loans are available to eligible veterans, military, and their families. One major benefit of the VA Loan program is the ability to purchase a home with zero money down.
Jumbo Loans – Many mortgages must meet requirements set forth by Fannie Mae and Freddie Mac. Loans that meet these requirements are referred to as conforming loans. One requirement is that the loan amount cannot exceed $417,000 (in most cases). Jumbo loans are loans that exceed this amount They are often selected by buyers looking to purchase more expensive homes, vacation properties, and investment properties.
Purchase loans can found with either a fixed rate, adjustable rate, or combination of the two. The type of rate that is best for your individual situation will depend on factors such as how long you plan to stay in the home or whether or not you plan to refinance relatively soon.
Fixed-Rate Mortgage – Fixed-rate mortgages will maintain the same interest rate throughout their lifetime. A fixed-rate mortgage offers borrowers peace of mind knowing that their monthly payment will never change regardless of changes in the mortgage market. You will typically find fixed-rate mortgages offered as either 15-year, 20-year, or 30-year loans.
Adjustable-Rate Mortgage (ARMs) – The interest rate on an ARM will fluctuate periodically. ARMs may start with a fixed-rate for a number of years before transitioning to an adjustable rate. These are known as Hybrid ARMs. For example, a 7/1 Hybrid ARM has a 7-year fixed period followed by an adjustment each year thereafter. ARMs typically start with a lower rate than fixed-rate loans meaning you pay less in the early stages of the loan.
Whether you are purchasing a home in Prattville, Montgomery, Wetumpka, Millbrook, or Tallassee, at Real Estate Funding, we will pair you with the purchase loan that is best suited to your individual needs. To find out which option is best for you or to begin the pre-approval process, contact us today.