USDA? FHA? Conventional? What are the Differences in the Type of Loan?

If you are starting the home buying process and are confused about the types of loans that are offered, don’t worry you are certainly not alone.  While your  houses with logolender should explain the differences, pros, and cons to each loan here is a quick overview so that you can have an idea before you meet with the lender.

Fixed Rate Mortgage Loan: This is a very common type of loan where the monthly payment amount is amortized (meaning the same) for a set amount of years.  The amount of years can range from a 5 year fixed rate mortgage all the way up to a 50 year mortgage.  In these loans you are paying more of the interest off in the beginning of the loan repayment and that dwindles as you pay more into principle.  In these loans you can shorten the length of the loan by paying a bit more toward principle each month.

FHA Loan: These are especially handy for first time home buyers or those with not-so-great credit since the down payment requirement is minimal and your credit scores are not near as important.  In fact, if your FICO score is 580 or above you only have to put down 3.5%.  These loans are insured by the government through mortgage insurance that is funded into the loan.

USDA Loans: (sometimes called a rural development loan): These mortgages are designed to serve buyers in rural or small towns where credit availability can be tight.

VA Loans: These loans are reserved for active and retired military personnel.

If you quality for the USDA or VA loan than you can get the biggest loan for the least.  Down payments can be as low as zero!

Read this article for more information on specialty loans.

Tips for Improving Your Credit Score ASAP

By now most of us are aware of how important your credit score can be when it comes to purchasing the house you’ve always dreamed of.  In fact Good Credit Scoreeven 2 points difference in your credit score can literally cost you thousands of dollars.  With that being said there are some simple tips to follow to help improve your credit score, get a better interest rate, and assist you in finding a lender to help you buy your new home!

(An excellent credit score=720 and up…. A Good credit score= 680-719… An average credit score= 620-679… A poor credit score= 580-619… A bad credit score= 500-579… A miserable credit score= Less than 500)

* While this may seem obvious, one of the best things you can do is start paying down your credit card bills.  When you have a lot of unpaid credit on your account it can make your score lower.  By just working to pay down your outstanding debt over a two month period can greatly improve your score.

* The same thing can be true for paying your bills on time.  Even if there is a “grace period” offered it is better to pay before the actual due date.  Doing this without fail for a few months can improve your score.

* Don’t close out/cancel credit cards if you are trying to improve your score.  While it may be tempting to do so it can actually decrease your score because then you would be using a higher percentage of your credit available.  If you feel that it is necessary for you to cancel some then be sure to keep your oldest card open regardless of the interest rate.  Banks will also look at length of your credit history and if all of your credit cards are newer ones than it appears you are a new borrower.

* Don’t open a lot of new cards to increase the amount of credit available.  Doing so looks suspicious to lenders.

* While it is highly suggested you work on paying down the balances you can also improve your score immediately by evening out your usage.  What I mean by this is by taking a card that is almost maxed out and putting some of the balance on another card.  Try to get the usage to about 20-30% of your allotted credit limit on each card as opposed to zero balance on a few and 90% on one.

* Another thing that you can do immediately is to go over your credit report with a fine tooth comb.  You would be amazed at how often there are mistakes on credit reports.  Ensure that the lenders have reported your credit limits accurately as well because that can greatly affect your credit ratio.

If you have any questions or want more suggestions on improving your credit score or which lenders will work with you feel free to contact us.  We look forward to hearing from you!

Why Buying A House During Tax Season Makes Perfect Sense

taxrefundpmWith interests rates still low and the great selection of homes on the market right now it only makes sense that this spring is a perfect time to buy your new home.  Not only that but as I’m sure you have heard that often times a house payment is actually less than your current rent payment.  The issue that many of us run into is having enough money for the down-payment on a new home.  This is especially true for first time home buyers who have not built up equity in their current home.  This is why this spring is ideal for buying since you can use your tax refund for a down payment this year!  Even if your refund is not a huge one it will probably still be enough.   Many people mistakenly think that you need to have a 20% down payment on a home when in fact many lending companies only require 5% as a down payment amount.  By using this tax refund money you could also qualify for a larger home or more importantly allow for smaller monthly payments because you are taking out a smaller mortgage.

So take advantage of this time of year and start looking for your new house today.  If you have questions as to what you can afford with your tax refund or what the next step is that you need to take feel free to contact us today! We look forward to helping you fulfill your dreams of home ownership!