Category: Loans
Many homebuyers don’t realize there are several government home loans designed specifically for first-time buyers until it’s too late! Below we’ve listed a few of the most popular programs and shared some details that will help you land an excellent mortgage package.
FHA Loan
An FHA loan is distributed and insured by the Federal Housing Administration. The FHA is an agency within the U.S. Department of Housing and Urban Development. With an FHA loan, the lender won’t experience a loss if you default on the mortgage. These loans come with competitive interest rates, lower down payments and closing cost than conventional loans. If your credit score is 580 or higher, you may be eligible for a down payment as low as 3.5 percent of the purchase price. However, if your credit score is lower than 580 you may still qualify for an FHA mortgage, but the down payment will be at least ten percent of the purchase price.
USDA Loan
The United States Department of Agriculture has a homebuyer assistance program focusing on homes in selected rural areas (no farm required). The USDA guarantees the loan, and in some cases, no down payment is required, and the payments are fixed. Applicants with a credit score of 640 above undergo a simple process. With a score below 640 you can still qualify for a USDA loan. However, the lender will ask for extra documentation about your payment history. The loan program includes some income limitations, which varies by region.
VA Loan
Active-duty military members, veterans, and surviving spouses are eligible to receive a loan backed by the United States Department of Veterans Affairs. The VA guarantees a portion of the loan, leaving room for lenders to offer some special features. VA loans come along with competitive interest rates and don’t require a down payment. Loan recipients aren’t required to pay for private mortgage insurance (PMI), and there’s no minimum credit score needed for eligibility. If meeting payments on the mortgage become difficult, the VA will help negotiate a deal with the lender on your behalf.
Good Neighbor Next Door
The Good Neighbor Next Door Program is sponsored by HUD and assists law enforcement, firefighters, teachers, and emergency medical technicians with housing. The program offers a 50 percent discount on a home’s listed price in locations deemed “revitalization areas”. To be eligible, you must commit to living in the home for at least 36 months.
Fannie Mae or Freddie Mac
Fannie Mae and Freddie Mac collaborate with local lenders to offer mortgage options benefitting low to moderate-income families. Lenders supported by Fannie Mae and Freddie Mac can offer competitive interest rates and accept down payments as low as three percent of the purchase price.
Ready for the Next Step?
Want more information about government home loans? A home loan expert at Assurance Financial is ready to help you choose the right loan for you today. Our team of loan officers is qualified to help you find a program that fits your needs. Click here for more details and to get started today.
Obtaining a home loan isn’t a one-step process. Below we’ve laid out the most essential aspects of the home loan process. Our guide will help you be prepared for every step of the way!
Save Up for a Down Payment
The home loan process always starts with saving. Depending on the type of loan you choose, you may be required to make a down payment ranging from 2.25% to 20% of the purchase price of the home. Start by creating some room in your monthly budget for the down payment. The most convenient method is establishing an automatic deposit to a savings account, specifically for your home loan. If a large down payment isn’t realistic for you, consider an FHA loan. This loan program is designed for home buyers who can only make small down payments.
Track Your Credit Score
Having a good credit score makes the home buying process a breeze! Before you start the buying process, get a copy of your credit report. Looking at your report will help you understand how your credit profile appears to potential lenders. Once you’ve examined your credit profile, you can begin taking steps to improve your credit score if need be.
Get Organized & Prepared
When you submit your mortgage application, you’ll need to hand over a few important financial documents to your lender. Take some time to get organized and find all the records you need to provide your lender. Having these documents at the ready will accelerate the processing of your loan application. In most cases, you’ll need to provide your last two pay stubs, your previous two tax returns, your most recent W-2 form, and current bank statement.
Discover Which Loan Option is Best For You
Despite their sound advice, the loan program that worked best for your parents may not always be ideal for you. Take some time to research which loan program will fit with your current financial situation. Everyone has a set of unique financial needs. With a little digging, you’ll be able to find the loan that best suits your needs.
Contact a Lender
Once you’ve done all your research and assembled the necessary documents, it’s time to visit your lender. They’ll be able to assist you with all the heavy lifting involved in the mortgage process.
At Assurance Financial, we guide each of our clients through the home loan process, ensuring total transparency and support along the way. Our team of mortgage experts specialize in residential home loans and are here to help you. For more about our loan process, click here.
We pride ourselves on the expertise and approachability of our loan officers. We make sure everyone knows everything about home loans. The purpose of this is to ensure that we can assist you to find the best option for your situation and needs. When you work with us, we join your team, working with you to make sure everything moves as smoothly as possible.
However, no matter who you work with, there are basic principles every agent should have to assist you in the best way. These are the pillars our Loan Officers are trained under, and it’s the standard every home loan officer should adhere to when working with a client:
Know The Builders In Your Market
Multiple options for financing, terms, and processes are only available if the agent knows various builders within the area. Without this, they can’t assure you’re going to get the best option. Even if they don’t have an extensive history in the market, they should know the builders.
Understand The Builder’s Products & Specialties
Knowing what they can do and offer is a no-brainer for an experienced agent. If your agent knows the builders in the area, but not their expertise and offering, it’s a red flag.
Be Up To Date On What Lots Are Available & What To Look For
A good way to check and make sure this is happening is see if your agent accompanies you when the builder is walking you through the lot. Take note of the agent’s engagement, since they should have a basic understanding of the factors that are important to you. From excellent communication, experience with the builder and keeping your best interest at the forefront, your agent should be your best friend throughout this process.
New Construction Knowledge
Starting and financing a new construction build can be a tedious and overwhelming process. If the agent meets with you and doesn’t outline the processes involved, with the builders, lenders, sales reps, etc., then they didn’t do their homework.
Home loans are complicated. Financing new construction builds are also complicated. The point of working with an agent is for them to do all the heavy lifting, taking away the stress and getting you the best option for your situation and needs.
This principle is what we were founded on, and it’s what drives every one of our agents to deliver the most comprehensive, knowledgeable, and valuable information to you. Building your dream home shouldn’t be a nightmare. We make sure it isn’t. Contact our Loan Officers today!
A Construction-To-Permanent Mortgage Loan is a loan that brings you through the entire process of buying and completing construction with a single loan.
This loan helps you avoid having to obtain separate lots and construction financing, lowering the number of moving pieces. Toward the end of the construction period, you’ll be able to work with your lender to change the construction loan into a permanent loan. This type of loan can lower the confusion, paperwork, and headache associated with getting several different loans and financing options. It makes sure everything is in one place. However, you must apply for it just like any other loan and, just like any other loan, this one depends on whether you own the land.
If you do not own the land you’re building on; a construction loan is very beneficial in simplifying the borrowing process to one closing transaction.
If you own the land you’re building, remodeling, or fixing up, a construction loan is still extremely beneficial. It will make sure you have the funds you need to build on, or fix up, the property you currently own, helping you transition into a permanent loan.
The Main Benefit of Construction to Permanent Loans
You do not have to choose a construction loan and then close on a second, permanent loan when your construction is complete. If you want to build your own home on a lot you have or extensively renovate your property to make it your dream house, a construction to permanent loan may be the right financing for you.
What Is a Construction to Permanent Loan?
Construction to permanent financing is a type of loan which allows you to build or renovate your home. When the construction is done, this loan rolls over into a traditional mortgage without you having to go through another closing.
A construction to permanent financing loan may be right for a number of reasons. This financing allows you to borrow up to $2 million. Construction to permanent loan rates are also locked in when you apply, so you may not have to worry about increasing interest rates as you build.
You can use this type of loan for a lot, a build on your lot or renovations. It can cover labor and material costs for your primary or vacation residence.
What Are the Requirements for Construction to Permanent Loans?
Construction to permanent loan lenders may be taking a larger risk with a construction loan than with a traditional mortgage. After all, much can happen during the construction process. Renovations and builds can be delayed, can go over budget and the final result may not be worth as much as projected.
To protect again these issues, construction to permanent loan requirements require you to have:
- A good builder: You will need to speak to an experienced builder who has worked on similar projects and is licensed and insured. Check recommendations and backgrounds carefully to find a licensed general contractor who can do the work.
- Details of the build: Once you have a builder, make sure you have what is known as a “blue book” of the construction project, which will list everything from floor plans to the materials you will be using in your new home or renovation.
- Good credit: You may need a credit score of 680 and ideally of 700-720 or higher to qualify for this type of financing.
- An estimate: You may need to work with an appraiser to determine the expected home value. Whether you need this step will depend on your circumstances and your lender.
- A down payment: You may need a down payment of 20%, but this number may vary widely, depending on your assets, circumstances, proposed project and more. If you are not sure how much you need, you can speak to a loan officer at Assurance Financial to get details about how to qualify for a loan.
Our Construction to Permanent Loan Options
Assurance Financial has several options for your construction to permanent loan needs. We have these single-closing loans and two-closing loans if you prefer the added flexibility. We have loans for homebuyers and for builders. If you meet the requirements for a USDA loan and your project meets specific thermal standards, you may even qualify for USDA construction to permanent loans, which may come with competitive rates.
Assurance Financial understands it can be challenging to find the right financing product for you. If you have a vision for your home, come to us and we may be able to help make that dream a reality with practical suggestions and loan products. Since we underwrite in-house and don’t shop your mortgage around, we may be able to offer flexibility to help meet your needs.
Apply for a Construction to Permanent Loan Today
You don’t want a loan — you want a home. Assurance Financial understands that. It’s why we pride ourselves on being The People People with technology. We treat you like a person, not a number, and we explain your options in plain English. We are not just about numbers, but rather about your homeownership goals.
Our goal is to help more Americans reach the dream of homeownership. It’s why we focus on mortgages and offer a range of loan products to help you get into your dream home or vacation home. Whether you’re building your dream home or renovating or buying an existing home, Assurance Financial has loans for you.
You can apply for a construction-to-permanent loan in 15 minutes with Abby, your virtual assistant. The application is simple, with no need to know complicated terms or enter strings of numbers. Abby lets you sign into your payroll and banks to instantly verify assets and income, which can help you speed up the application and means you don’t have to fax in statements.
If you prefer to speak to a person, we have mortgage experts licensed in 28 states. Our friendly and experienced professionals can listen to your goals and concerns and address them with customized advice. Contact a loan officer today!
In fact, even if you apply with Abby, your application is handled by a real person, so you don’t have to worry about being treated like a number or getting lost in a computer system.
Our process is simple. We pre-qualify you in 15 minutes by pulling your credit and offering you a free, no-obligation quote on a rate. Once you have found your home, builder or are ready to refinance your property, simply fill out the full application. We take care of processing, including in-house underwriting, and let you know if you have approval. Once you sign with a notary to close your loan, you can get started on breaking ground on your new home or moving. Since we handle end-to-end processing without outsourcing, we can take care of your application quickly and answer your questions.
If you decide construction-to-permanent loans are not right for you, we have every loan you could want, from VA mortgages to jumbo loans. To get started, apply online for a home loan or find a loan officer near you to talk about construction loans or other mortgage options.
At this point, you may be weighing your options on the specific benefits of a construction-to-permanent loan.
Let’s go over the basics: Construction-To-Permanent Loan will let you borrow upwards of $2 million, locking in interest rates when you apply, and enabling you to finance a lot or build on a lot for your primary residence or vacation home.
Along with this, you get a 12-month construction period where you make interest-only payments on already distributed funds. As you transition into a permanent loan, you can decide if you want a fixed or adjustable rate loan for financing.
And, above all, this type of loan only has one close, saving you time and money. At the end of the construction period, your home construction loan will be converted into a permanent loan without additional closing costs. At which point, you will begin paying both interest and principal each month.
To start building your dream home, you need first to make sure you have all the funds required. We take the stress out of the entire process with our construction-to-permanent loans, making everything easier, faster, and all in one place.
If you need help converting your construction loan into a permanent one or are interested in financing a new build, contact our Loan Officers and let us help you find the perfect option for you!
Getting ready to buy your first home? Making a few mistakes along the way is common. Below we’ve listed 10 of the most common mistakes first-time homebuyers MAKE and how you can avoid them!
1. Overlooking additional expenses.
Once you’re officially a homeowner, there are a few additional expenses you’ll have to pay every month on top of your mortgage payment. Homeowners are responsible for paying property tax, insurance, and fees for any repairs that are required. Consider these additional expenses during your decision-making process because it’ll save you from a few surprise expenses in the future!
2. House-hunting before getting preapproved.
We understand: viewing houses is much more exciting than sitting in a lender’s office. However, being preapproved before looking at homes allows you to understand your options fully. Your lender will produce a loan amount based on your current financial situation, which can help you correctly narrow down which homes work for you.
3. Spending all their savings.
Spending the majority of your savings on the mortgage down payment can be a disastrous mistake. Many homebuyers reach deep into their savings so they can pay 20 percent or more for their down payment and avoid mortgage insurance. This practice can substantially reduce your monthly mortgage payment amount but it is unwise if it leaves you with no savings at all. Emergencies and unexpected expenses can pop up at any moment, and having a rainy-day fund to rely on offers invaluable peace of mind.
4. Not being realistic about what’s affordable.
What you think you can afford and what you actually can afford doesn’t always line up. Before you begin the home buying process, sit down and map out a budget for your expenses. Include car payments, loan payments, groceries, health insurance and any other fees you come across every year. Subtract this amount from your salary after tax to see where a mortgage payment can fit in with your other expenses.
5. Opening new lines of credit before the deal is closed.
If your credit score changes drastically between the pre-approval process and closing, your loan may be completely transformed. Extreme changes lead many lenders to modify their terms or rescind the offer entirely. During the home buying process, refrain from opening new lines of credit and make sure you’re meeting all of your monthly payments.
6. Maxing out on the mortgage limit.
You shouldn’t always take the largest amount your lender will throw at you. Staying below your mortgage limit will offer you more financial flexibility, in the long run, leaving you room to cover additional expenses. Use your monthly budget to figure out what your limit should be.
7. Neglecting to plan for the future.
It’s fun to imagine what your life will look like in a house. However, you should also take some time to question how the property and neighborhood will change over time. Consider what kind of development plans are in the works for the area and local zoning laws. These details will help realize whether the property is right for you.
8. Forgetting inspection.
Before closing, it’s essential to get an accurate assessment of the condition of the house. Without an inspection, important repairs or structural problems may get swept under the rug and come back to haunt you. Hold off on any commitments before receiving a full picture of the house’s current physical condition to prevent making a huge financial mistake.
9. Leading with emotion
Buying a home is an exhausting, frustrating process. It’s incredibly easy to fall in love with a house out of your price range and be unrealistic about your budget. During your search, remain vigilant and sensible about what you can afford. It’ll save you from severe financial hardships in the future.
10. Not meeting with a loan officer in person.
Online research is an excellent place to start, but your home buying process isn’t complete until you’ve met with a loan officer in person. A loan officer can help you fully understand every step of the mortgage process and clear up any confusion you may have.
At Assurance Financial, our home loan experts specialize in residential home loans and are dedicated to assisting you every step of the way.