If you're thinking about buying a home in Davis County or Weber County, Utah, mortgage rates are probably one of the biggest questions on your mind.Buyers regularly ask whether they should buy now
Different Mortgage Loan Options
Dated: February 7 2019
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One of the largest investments and decision you will make in your life is purchasing a home. As such, choosing the right mortgage from the start remains important. Lucky for you, there are several options to choose from including conventional, FHA and VA loans.
Conventional
Briefly, a conventional mortgage is a home loan that isn’t insured or guaranteed by the federal government. The loan still conforms to limits and regulations set forth by Freddie Man and Fannie Mae. You can acquire conventional loans at a fixed or adjustable rate.
Private entities including banks, credit unions, private lenders or savings institutions usually offer conventional loans. Since the government doesn’t back the loans, they present a higher risk for the lender. As such, conventional loans require larger down payments anywhere from five to 20 percent leading to buyers with financial stability that are less likely to default. The upside is that a larger down payment also means lower monthly payments.
FHA
Federal Housing Authority (FHA) backed loans provide an opportunity for lower- to middle-income buyers to purchase a home with smaller down payments as little as 3.5 percent. These loans make your mortgage more affordable if you don’t qualify for a conventional loan.
In comparison, FHA loans offer smaller down payments, competitive interest rates and lower closing costs than conventional loans. One additional benefit is that a financial gift from either a family member, employers or charitable organization can account for 100 percent of your down payment.
The one drawback to FHA loans is the mortgage insurance. Although all loans require mortgage insurance until you pay your loan down to 80 percent or more of the appraised value, FHA loans require the insurance for the life of the loan.
VA
Department of Veterans Affairs (VA) loans provide an affordable mortgage option for those that are serving or have served in the military. These loans are easier to qualify for and are partially guaranteed by the government as long as you meet certain guidelines.
Unlike conventional loans, VA home loans do not require down payments. Instead, you will need to pay a modest funding fee. Additionally, a VA loan doesn’t require mortgage insurance. On top of that, regulations limit the fees military borrowers pay to obtain a loan. These regulations save thousands when it comes to closing costs.
Almost all members of the military and veterans qualify including spouses of service members who died during active duty are eligible for VA loans. Although borrowers shouldn’t have excessive debt and must prove sufficient income, the guidelines for VA loans often are more accommodating than conventional and FHA loans. Also, the home must be you primary residence.
Julie Dunaway
Serving the Salt Lake, Weber, and Davis counties, I am committed to sharing my passion for real estate with others to ensure they find the home of their dreams. My personal attention, guidance & patie....
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