As soon as I realized that my personal financial picture was a little bleak, I started thinking about taking out a personal loan. I wasn't really looking forward to going into debt, but I knew that if I wanted to solve a few short-term problems, a loan would be the way to go. I talked with a few of my local financial institutions to get a good idea of what they could offer me, and then I sat down to go over the paperwork. It was incredible to see how much money I could save by securing a lower interest rate. Check out my blog for more information about loans.
If you've decided it's finally time for you to buy a home, one of the first things you'll need to do is visit some lenders and start applying for a mortgage. Getting pre-approved for a mortgage before you even start shopping for a home ensures that when you do find the home of your dreams, you can act quickly -- without waiting for financial approval. Before you apply, make sure you decide which of these three main types of mortgages is right for you.
Conventional Mortgage
A conventional mortgage is one offered by a private lender, such as a bank or credit union, without any sort of backing from a government agency. The contract you enter into is just between you and the lender. If you do not pay, the bank loses out.
Because there's some risk involved for the lender, qualifications for a conventional mortgage tend to be a bit more strict than those for other types of mortgages. For instance, most lenders will require a down payment of 20% of the cost of the home. They may also require that you've been at the same job for a certain period of time or that your credit score falls into the "good" zone or above.
FHA Mortgage
An FHA mortgage is one that is backed by the Federal Housing Administration. These loans are still given out by lenders, like banks and credit unions, but the government guarantees that if you stop paying, they will reimburse the lender. FHA mortgages are typically meant for young and first-time home buyers. They don't require as large of a down payment. However, the rate for an FHA mortgage is typically a bit higher than that for a conventional mortgage. This means your payment will be a little higher each month and you'll pay more interest over the life of the loan.
VA Mortgage
If you or your spouse served in the military or is a veteran, you may be eligible for a VA mortgage. Like an FHA mortgage, a VA mortgage is offered by a lender but insured by the government. The required down payment is usually lower than with a conventional mortgage, and rates tend to be on-par with those offered on traditional mortgages. However, in order to qualify for a VA loan, you must live in the home you're buying; you cannot rent it out. The total amount you're allowed to borrow may also be lower than with a conventional mortgage.
Share12 May 2017
