Which Mortgage Loan is Best for Me?

When looking to buy a home, there are a lot of things to consider:  how many bedrooms, how many bathrooms, 2-story, 1-story, Pool or no Pool.  Deciding on the best loan program isn’t usually the first thing that is considered, but it’s very important in the home buying process.  Some of the main questions to consider:

  • What programs are available with my credit score?
  • Which program requires the least amount of down payment?
  • What program will give me the lowest payment?
  • Do I have to pay mortgage insurance?

No two home buyers are the same, so the best loan for one buyer is likely unsuitable – or even unavailable – to another.  You’ll want to make sure you find a good loan officer to help you make a final decision.

The main loan programs available are:

  • FHA
  • VA
  • USDA
  • Conventional

FHA Loan:

FHA loans are very popular with First Time Home Buyers.  The popularity is understandable.  With a small down payment requirement, lenient credit score standards, and flexible income guides, the FHA mortgage is making homeownership available to a many people who have been stuck renting for years.  The benefits of an FHA loan:

  • 3.5% down payment required
  • Credit scores as low as a 580
  • Past derogatory debt (like Bankruptcies and Foreclosures) require shorter waiting periods
  • Lenient income qualification
  • Is insured and guaranteed by the federal government

VA:

VA loans are for those who served in the military.  VA loans play an important role in helping those who serve and have served to buy a home because no down payment is required.  Other benefits of the VA loan:

  • Mortgage rates are typically lower than Conventional Loans
  • No monthly mortgage insurance required
  • You can reuse your VA loan benefit
  • You don’t have to be a first-time home buyer
  • VA is very lenient on past derogatory credit. You only need to wait two years after a Bankruptcy, Foreclosure, or Short Sale to qualify.
  • Is insured and guaranteed by the federal government

USDA

A USDA home loan is a zero-down payment mortgage for eligible rural and suburban homebuyers.  The program is designed to “improve the economy and quality of life in rural America.” Key Benefits of the USDA Loan:

  • No down payment required
  • Low monthly mortgage insurance fees
  • Lenient credit scores and income limits
  • Applicants must meet income limits of the program
  • Buyer must purchase a home within USDA-eligible areas
  • Is insured and guaranteed by the federal government

Conventional Loan

A Conventional mortgage is a home loan that isn’t guaranteed or insurance by the federal government (like FHA, VA, and USDA are).  This program offers flexible down payment options (as little as 3% down) but requires higher credit scores and is stricter on income and past derogatory credit.  It’s a great option for buyers with higher credit scores and larger down payments because rates tend to be lower than and mortgage insurance is cheaper.  Key benefits of a Conventional Loan:

  • Down Payment as low as 3%
  • No upfront mortgage insurance (like FHA, VA, and USDA)
  • No monthly mortgage insurance with 20% down
  • Loan amount up to $453,100
  • Unlike FHA, mortgage insurance is cancelable with 20% equity.

If you have any questions on these loans program, or if you need help determining which option works best for your specific situation, please call, text, or e-mail me anytime.

Senior Mortgage Banker Ryan Gilliam is a lifelong Arizona resident. He attended Dobson High School in Mesa and graduated from Arizona State University with a Business degree. He’s been in the mortgage industry since 2004 and has always been committed to client education and helping them through the entire mortgage process. 

Mobile: 602.614.0740

 

 

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7 Things to Save for When Buying a Home in Arizona

Face it, it’s time to buy a house. You’ve been thinking about it more and more since your rent went up…AGAIN. All of your friends are taking the plunge and some are even building new homes with the New Build Ninja AKA Jen Duncan! You’ve realized it’s time to get it together and start the process, but where to start? Buying a home can seem daunting, but with a strong real estate team supporting you, and a few tips, you can simplify this exciting process.

So, what is the most important thing you can do to prepare for buying a home in Arizona?

Start saving ASAP!

Toss as much in a savings account as possible. The more money you have to work with, the more options you’ll have during the process which can save you time and money in the long run.

Here’s what you are saving for:

Earnest Deposit: This is the buyers “good faith” money. This deposit is due upon an accepted contract and is held by the title company in an escrow account until closing. The typical earnest deposit amount is 1% of the agreed upon sales price.

General Inspection and Termite Inspection: The inspection period is typically the first 10 days following the accepted contract date in AZ. During this time, the buyer is responsible for performing any and all inspections of the property. It’s common for the buyer to cover this fee as well as a termite inspection fee. Depending on the size of the home and the inspector that is hired, this fee is typically around $400.

Closing Costs: Costs to close for the buyer is typically around 2-3% of the sales price for financed buyers. This estimate does include prorated property tax amounts and an appraisal fee. The appraisal fee will likely be due once the buyer’s lender orders the report. This fee is approximately $500. Costs for cash buyers are a bit less and there are no appraisal fees generally.

Home Warranty Plan: Home warranty plans can help ease the stress of home owning. Depending on the size of the home, home warranty plans are around $500 for a basic plan and around $650 for a basic plan with pool coverage.

Deposit: Depending on the loan program, financed buyers usually have a down payment due at closing. Typical down payment amounts are 3.5%, 5%, 10% and 20%. A quick conversation with Ryan Gilliam with Waterstone Mortgage will help determine the best, most cost-effective loan program and can advise down payment amount.

Repairs: Keep extra money aside for repairs that may be needed prior to moving in. A little extra cash for possible appliance purchases is a good idea too. Both of these items may be negotiation points during the sale, however.

Utility Accounts and Deposits: Some utility companies charge deposits for new utility accounts. Buyers should be prepared for this and call all utility companies during the inspection period to check all fees and schedules.

Some of these costs can be absorbed by the home seller and that can be accomplished by having an experienced and seasoned negotiator on your side. In Arizona, the home seller is responsible for paying the fee to the buyer’s agent. There is no charge to the buyer.

Contact me with any questions about real estate in Arizona! Either call me directly at the number below, or fill out the form and I will be in touch.

Katie Halle Lambert
480-250-0023
EvoAZ.com