There is no panacea in home financing. Everyone’s needs and goals are different; thus, when choosing the right mortgage, you need to consider how much you are willing to spend, how much you have saved, and how long you want to stay in debt.
When evaluating your options, consider the following questions:
- How are your finances?
Check your credit score to see where you are eligible to apply for a mortgage. Certain programs require a FICO credit score of only 500, while others require much higher scores. You will also need to look into your savings to determine how much of a down payment you can afford to make on a home and how quickly you can repay your loan.
- What do you want out of life?
You will need to decide what kind of lifestyle you want. Do you want a life in the city with a small apartment or a spacious home in the suburbs? How long do you want to stay in this situation? Do you plan on moving in a few years, or do you want to put down roots and settle in?
- How much of a risk are you willing to take?
You will need to choose whether you want to pay a fixed-rate loan over a longer period of time or if you are willing to pay an adjustable-rate mortgage that will adjust depending on forces affecting the housing market. While the latter option may seem like a higher risk, those with an astute knowledge of these market forces can actually receive a windfall of profit given the proper timing and conditions during the house’s sale.
Once you’ve had time to reflect on your options and possibilities in preparation for buying a home in Winthrop, WA, you will then have to select the type of mortgage that will fit your needs best. Here are four of the most common types of mortgages:
- Conventional mortgages. These loans usually come from banks or credit unions. Borrowers with good credit, stable employment, and enough savings to pay a 3% to 20% down payment can take advantage of this mortgage type.
- Federal Housing Authority (FHA) loans. First-time buyers or buyers who have not owned a home in the last three years can apply for a loan from FHA-approved lenders. Down payment charges are lower and the applicant may have a credit score that’s lower than the standard scores indicating good credit. But, given the additional risk on the side of the lender, borrowers with lower-than-desired credit scores may also be required to pay an additional mortgage insurance premium.
- Special programs. Active military personnel and veterans may buy a home without a down payment through a Veterans Affairs (VA) Loan, while buyers whose incomes meet their area’s median income may qualify for a loan from the US Department of Agriculture (USDA).
- Nonconforming mortgage loans. Also known as jumbo loans, this type of mortgage is available to those wanting to invest in luxury homes or houses in higher-priced markets. Be prepared to pay a 10% to more than 20% down payment if you choose a jumbo loan.
Remember: A mortgage is a commitment. Make sure to choose well by consulting Coldwell Banker Winthrop Realty’s experienced Realtors. Call our team at 509.996.2121, or send an email to [email protected] for your inquiries.