America is experiencing a profound housing shortage, not just here in Eugene and Springfield Oregon.…
Real estate financing doesn’t have to be confusing. Prospective homeowners have many options available.
The first thing you should do is calculate how much home you can afford. You can use an online mortgage calculator like this one at bankrate.com to find out how much home you can afford. Just plug in your monthly income and expenses, and it will show you how much you can afford to pay for a mortgage. It will show you total home price and your monthly payment, too.
Next on your list is checking your credit score. You can use a site like Credit Karma to check your current score. Consider signing up for a free annual report at AnnualCreditReport.com to stay on top of your credit score. The higher your score, the better mortgage terms you will receive.
Credit.com says that the minimum credit score to obtain an FHA-backed mortgage is usually 600. For conventional loans, aim for a score of 740. You can secure a mortgage even if your credit score is not high, but it will cost you much more money over the life of your loan. You will pay more in monthly interest rates, down payments, and insurance.
If you obtain real estate financing in spite of your low score, consider doing everything you can to improve your score. You can check out our tips for improving your score here. Ask you lender if you have any options for better interest rates if you improve your score. You may have to wait it out and refinance later, but considering the cost over the lifetime of your mortgage, it may be well worth the hassle to refinance.
Real Estate Financing Options
The federal government has many options for citizens seeking a mortgage. Check out the following options to find out if you qualify:
FHA loans typically come with competitive rates, smaller down payments, lower closing costs, and easier qualification.
VA Loans are backed by the Department of Veterans Affairs. Current service members, veterans, and their surviving spouses qualify.
This loan program is relatively unknown, but certain rural areas qualify for a loan with no down payment and fixed loan payments
Both programs work with local lenders to offer mortgages to low and moderate-income families. They offer competitive interest rates and low down payments
A fixed-rate mortgage provides predictable monthly mortgage payments because the interest rate does not change over the life of the loan
An ARM provides lower interest rates at the start of the loan, and then the rate changes according to current rates, usually ten or so years into the loan.
A bridge loan, also known as a gap loan or repeat financing loan is an option for homeowners who buy a home before selling their current loan. The loan “wraps around” your current home loan and then you refinance after you sell.
Seller financing is a less common option, but one that might benefit those with credit issues. In a Purchase Money Mortgage, or Purchase Money Trust Deed, the seller accepts a promissory note and mortgage from the buyer as partial or complete payment of the property.
Your New Home Is Waiting!
Wrap up your real estate financing and go find your new home!