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 Types of Loans Available
Information on Central Ohio and Columbus, Ohio home loans, including conventional loans and FHA home loans. Conventional Loan
This is the most cost-effective loan available. If possible, you would choose Conventional before FHA and non-conforming loans. If you have good credit scores and are not looking to push your borrowing capabilities to the max, then conventional financing probably is for you. There are a full range of products available: - 5% Down Payment from your own savings.
- 0% Down Payment. Available for borrowers with excellent credit.
- 3% Down Payment. Available for borrowers with excellent credit with limitations.
- No PMI (Private Mortgage Insurance)-with down payments of 20% (sometimes 15%)
- 30 year and 15 year fixed term are most common, when long and short term rates vary little.
- ARMs (Adjustable Rate Mortgages) and balloon payments.
FHA
A government-co-insured mortgage. Appropriate for borrowers who: - Have credit issues (typically a FICO score below 620) but no late payments in the last 12 months
- Want to borrow more money than a conventional lender will allow. FHA loans have more generous lending criteria.
- Want a low down payment.
- Does not have a down payment coming from their own savings. Gift money can count as a down payment.
If you cannot qualify for a conventional mortgage, then an FHA mortgage may be for you. If you qualify for a conventional mortgage you may want to avoid FHA since it is more expensive. The extra costs of an FHA loan come from: - Up-front MIP (Mortgage Insurance Premium) = 1.50% of the mortgage
- Often require additional certifications on various structural and mechanical items
- Appraisals that may add additional requirements to the transaction, which can complicate matters.
- Additional time to close due to government requirements.
- Mortgage insurance on a monthly basis in addition to a front end premium
VA
If you are a veteran you may qualify for a VA loan. If you want to close with the least amount of cash as possible and not pay a premium, then VA is the way to go. Not only is VA zero-money down, but you can also have the Seller pay for almost all of your closing expenses. If your agent structures the transaction correctly, you should be able to come to closing with no money required. It's not unheard of to even receive a check at closing. There is no monthly mortgage insurance change. Non-conforming loans vary from first time buyer programs with special and advantageous features to loans. Loans for borrowers with poor credit or those carrying excessive debt. Those loans usually have unfavorable rates and terms and/or require compensating factors like very large downpayments, additional collateral, or a co-signer.
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