Today I’ve brought in a lending expert to tell you what you need to know about mortgage loans.
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Today Mona Edick from Bay Equity joins me to talk about what you need to know when it comes to mortgage loans. Mona is a mortgage expert with over 17 years of experience in the industry, and she has a few important points to cover.
First, there are four core mortgage loans:
- FHA loan: This is not a first-time homebuyer program, but it does allow a down payment as low as 3.5%. It’s also more generous with its debt-to-income ratio and accepts a lower credit score.
- USDA loan: This allows zero money down and you don’t have to be a first-time homebuyer either, but the home must be located in a designated area.
- Conventional loan: This is more of a traditional loan in that it requires a bigger down payment, a higher credit score, and a lower debt-to-income ratio.
- VA (Veteran’s Affairs) loan: This requires no down payment, but you must be a veteran of the armed forces to apply.
There are a couple common misconceptions when it comes to mortgage lending.
First, there’s only one product that requires you to be a first-time homebuyer, and that’s the down payment assistance through Minnesota Housing. If you take out a loan using that product, you cannot have owned a home for at least three years. If you live in Colorado, contact a House Hunters Team member to find out more about down payment assistance options in Colorado.
Second, depending on the loan, you don’t necessarily have to put 20% down. As stated above, FHA loans allow payments for as little as 3.5% down, conventional loans allow 5% down, and VA and USDA loans require no money down. With Bay Equity, you have the option to qualify for the Chenoa Grant Program, which also requires zero money down.
If you’re thinking about purchasing a home this year, your first step should be to either reach out to a loan officer and set up a meeting so they can go through your documents and lending options or simply apply for a mortgage online. Even if you choose to apply online, Mona still recommends at least one face-to-face meeting with a loan officer during the lending process. To check out our elite lenders, click here.
If you have any questions about mortgage loans, don’t hesitate to reach out to us. We’d love to speak with you.