I always suggest to my clients that they know how much home they can afford without putting pressure on their budget before beginning their real estate search. This can be done through the pre-qualification process. Your lender is key in gathering this information together for you. Once you know how much you can afford to spend your search can be narrowed down to the homes that fit your specific criteria.
But that’s just the start. Knowing the type of loan you want to apply for is very important and your lender can assist you with this process as well. There are an infinite number of loan types out there so make sure you fully understand what type of loan works best for you before making any kind of commitment. Below I’ve listed a few types of loans that are popular in the Sandhills area.
Fixed Rate Mortgages- Fixed-rate mortgages allow for repayment of a debt in equal monthly mortgage payments over a specified period of time, from 10 to 50 years. During the first few years, only a small portion of the payment pays off principal. Most goes to pay off interest.
Borrowers gravitate toward fixed-rate mortgages in-lieu-of adjustable-rate mortgages because they like the security of knowing exactly how much they’re paying per month for principal and interest for the duration of the loan. Because the interest rate is fixed, if overall interest rates increase, it does not affect the fixed-rate borrower.
FHA Loans– FHA (Federal Housing Authority) mortgage loan types are insured by the government through mortgage insurance that is funded into the loan. FHA loans are available to anybody but are used most often by first-time homebuyers, and low-to moderate-income buyers. However, there are no income limit qualifications. FHA backed mortgages make buying a home easier, or possible, thanks to less-rigid borrower requirements: A low minimum down payment, reasonable credit expectations, and more flexible income credit expectations are just a few examples. If you want to learn more about FHA Loans visit: www.fha.com
VA Loans- This type of mortgage loan is guaranteed by the U.S. Department of Veterans Affairs (VA) and is issued through qualified private lenders, such as banks and mortgage companies, who then provide more favorable terms.
The VA loan was designed to offer long-term financing to eligible American service members, veterans or their surviving spouses. The basic intention of the VA direct home loan program is to help veterans buy, build, repair, retain, or adapt a home. Eligible areas are generally rural areas and small cities and towns not near metropolitan or commuting areas of large cities. There are maximum loan limits as well. To find out what the loan-limit is in our area call 800-884-5560.
Here are few advantages a VA loan can offer: No down payment, no PMI (Private Mortgage Insurance) purchase required which means lower monthly payments, competitive interest rates, and less stringent qualification standards. To learn more about VA Loans visit: www.benefits.va.gov/homeloans/
USDA Loans- Also known as the Section 502 Direct Loan Program or Single Family Direct Home Loans. This loan assists low- and very-low-income applicants obtain decent, safe and sanitary housing in eligible rural areas by providing payment assistance. The home to be purchased or served must be located in an eligible rural area as defined by USDA and Moore County qualifies for this. Funds can be used to build, repair, renovate or relocate a home, or to purchase and prepare sites. Generally, rural areas with a population less than 35,000 are eligible.
A number of factors are considered when determining an applicant’s eligibility for Single Family Direct Home Loans. At a minimum, applicants interested in obtaining a direct loan must have an adjusted income that is at or below the applicable low-income limit for the area where they wish to buy a house and they must demonstrate a willingness and ability to repay debt. Visit the USDA Income and Property Eligibility website for complete details: http://eligibility.sc.egov.usda.gov/eligibility/
As you can see pre-qualifying for a home is only the first step. The most important part of the process is securing the type of loan that works best for you and your budget. And there are a number of options to choose from. My clients and I have worked with many local and regional lenders throughout the years. Doing your homework and getting good advice is key in filtering out all the options. If you want to know more about lending options and homes for sale in the Sandhills, please call or text me at: 910-528-6427. Let’s get started today!
— Lin Hutaff