Securing your financing is the first step in advancing with your purchase.
A pre-approval letter makes you a ready, willing, and able buyer, and provides you and your Realtor a guideline for inventory pricing.
Several financing programs are available.
VA financing allows you to purchase with no money down and no mortgage insurance. The program is available for active military, reserves, and their spouses.
FHA financing requires a minimum 3.5% down payment. Applicable MI, or mortgage insurance, will be added to your monthly payment and applies for the life of the loan.
FHA financing has more flexible guidelines, including a lower qualifying credit score and a higher DTI, debt to income ratio.
Conventional financing typically requires a 20% down payment, eliminates mortgage interest, and can offer more favorable interest rates. Additional programs such as the Buyer Ready program require a 3% down payment.
203K financing programs are also available. These programs roll in renovation costs to your loan, based on an after upgrade value. Higher interest rates and additional fees apply.
USDA loans are sponsored by the Department of Agriculture and provide 100% financing with no money down. Properties must meet certain guidelines and fall within an applicable USDA zone.
ARMs, or Adjustable Rate Mortgages, are also an excellent way to get your foot in the door. These programs generally offer lower introductory rates for a fixed period of time that adjust in prescribed time frames.
If you have excellent credit but are low on cash, Zero down ARMs are available locally.
Remember that your pre-approval is based on current market rates. Interest rates are not locked until you are under contract.
Property taxes and association fees can also affect your bottom line.
Your interest rate can ultimately impact you buying leverage.
Consult your lender for more information.