The Mortgage Process: What’s the Best Loan Program for You?

It is no debate that you would want to have your own beautiful house sooner than later. It may be the education project holding you back or the car loan you are servicing that’s giving you sleepless nights and a hard time to go for the house. Worry not.

There are plenty of options you could consider for an ideal home without even straining your financial muscles. One of these options is going for a mortgage loan that comfortably fits into your financial plans.

The mortgage process is an intensive screening and scrutinization procedure done by your bank or mortgage broker to help you secure the loan. The mortgage loan process usually takes about 30 days with a broker, but could take much longer with a bank or credit union, typically 60 days or longer. 

The mortgage process entails detailed, as you already know. One significant component of the process is the loan programs, which have varying rates to fit your specific needs.

Here are some of the outstanding loan programs you can choose for your mortgage plan.

1. Conventional Mortgage Loans

The term ‘Conventional Loans’ can be used in place of conforming loans. Or loans that conform to the limits set by Fannie Mae and Freddie Mac, the major purchasing agencies of mortgages in the U.S. 

The loan has its advantages, and you can only qualify if you meet certain demands. If you have the following on your side, you shouldn’t let this loan pass you by. 

• Stable employment history
• Strong credit history with a credit score of at least 620
• Enough funds to secure a 3% initial payment

You can use these loans to finance almost any type of property, including investment properties, vacation homes, or primary residence, among others. 

The loan limits for a conventional mortgage are $510,400 in low-cost areas and $765,600 for high-cost areas. Your loan request has to be within these limits if you wish to get approvals. These amounts change annually around the 1st of the year.

2. Jumbo Mortgage Loans

If you feel the loan limits set by Fannie and Freddie are not anything near the amount you want, then you can opt for Jumbo Mortgage Loans. In essence, any loan above $510,400 is considered a Jumbo loan.

A Jumbo mortgage loan is ideal for you if you intend to purchase a higher-end home that’s a bit more expensive. You undoubtedly need outstanding qualifications for this loan. The requirements include:

• An outstanding credit score of at least 660
• Minimal debt with a debt-to-income ratio of at least 45%
• Ability to raise a down payment of at least 10-20%

You will also enjoy competitive interest rates that would work fairly for you for the entire loan duration.

3. FHA Mortgage Process Loans

An FHA loan is covered by the Federal Housing Administration and is meant for buyers with low credit and smaller payments.

If you are a first-time home buyer, then the FHA loan is yours to grab. You can easily buy a home with a smaller down payment and lower credit scores than those required for conventional loans. 

The loan requirements are somehow easy to meet and convenient for many home buyers. They include:

• A credit score of 580 or more plus a 3.5% down payment
• A credit score of at least 500 with a 10% down payment
• Minimal debt with a debt-to-income ratio of less than 43%
• The home can be a condo and has to be your primary residence
• You must pay the Private Mortgage Insurance (PMI) upfront and yearly 

4. VA Loans

VA loans are specially created for qualified U.S. military members who are either actively on duty, veterans, or are eligible family members. If you are one, the loan has a lot of offers and attractive features for you.

With a VA loan, you will pay lower interest rates than the rates other loans offer. Plus, you won’t have to deposit any down payment to be considered for this loan.

However, you will have to part with some funding fee, which can be rolled into your loan costs later. VA loan requirements include:

• Variable credit score requirement (around 620)
• The loan is only for primary residences
• PMI is not necessary
• No need for a down payment
• No minimum credit score
• Funding fee

5. USDA Loans

This is a loan by the U.S Department of Agriculture that assures loans for rural homes ownership. It is an ideal option if you have a lower or moderate-income and want to purchase a home in a USDA-eligible rural area.

With this kind of mortgage, you can get up to 100% financing to purchase a home (not a farm or a shack up with livestock) in a USDA-eligible area.

The USDA loan requirements include:

• Lenders will accept credit scores as low as 620, but most will ask for at least 640.
• You will have to pay for PMI
• The home you purchase must be within a USDA-eligible area
• You have to meet some specific income limits to be eligible
• No down payment is needed

The Mortgage Process Comes up With the Best Loan Programs for You

You can trust the programs inherent in the detailed and thorough mortgage underwriting process as they are some of the best offers you could get in the market today.

All you need to do is weigh the options by looking at each loan program’s offer and checking how they meet your needs. 

Anytime you feel overwhelmed thinking through the entire mortgage process, you can always seek help from contact us to help you secure an excellent deal you will live to appreciate.