Home Finance Information
How much home can you afford? Whether it is your first or your last home, figuring out what you can afford and what is the best loan for your family can be daunting. Read up on the most common loans below to help you make the most of your money matters! Feel free to apply online or use the lender of your choice for additional and personal advice! And, word to the wise: I was a mathlete so if you are not a crazy number lover like me: partner with a top notch lender and they’ll compare and break it down in your favor! Ok here goes:
The fixed-rate mortgage is the most popular mortgage program in use today. Fixed-rate loans offer the borrow a fixed interest rate for the life of the loan, typically 15 year, 20 year or 30 years terms. Your principal and interest payment cannot go up or down.
Fixed rate homes are a great and affordable option, especially if you plan on being in the home more than a couple years. Some popular fixed rate loans are: FHA, conventional, RD and pairing with WCDA. You can have peace of mind knowing that your monthly payment will not change over time. We’ll have more on these loan programs below.
Adjustable Rate Loans
With an Adjustable Rate Mortgage (ARM), the interest rate changes periodically, and payments go up or down. Rates are tied to an index that reflects the cost of money at any given point in time. Generally speaking, lenders charge a lower initial interest rate for the ARM than for the fixed rate mortgage. If you are expecting interest rates to decrease in the future, or if you are trying to maximize your purchase power today knowing your income will rise in the future, then this loan may be right for you. Adjustable rate loans are attractive for buyers who expect to be in the home for a short period of time—typically 7 years or less. Generally speaking, I don’t love this for irst-time buyers but on the flip side: not a bad route for investment property or those who tend to relocate often.
FHA and VA Loans
The Federal Housing Administration (FHA), offers loans and they have government backed mortgage insurance (PMI). Think Fannie Mae or Freddie Mac for PMI. This is a loan that can be paired with WCDA. Normally this is a popular loan because it has such a low money down and larger debt-to-income ratio than other loans. This means it is easier to qualify for and great for cash tight home buyers. FHA loans have lower down payments and have no income restrictions — even those with lower credit scores may be considered. Past bankruptcy does not necessarily disqualify borrowers from using this program. My biggest con for FHA is that it HAS mortgage insurance for the LIFE of the loan. This adds to the payment and doesn’t come off which forces you to refinance at some point if you want it gone.
VA loans are truly special and a personal favorite of mine. The Department of Veterans Affairs (VA) offers a zero-down mortgage program to qualifying vets. Your lender will work to get your certificate of eligibilit. Though it has the very strictest home condition requirements; it has the maximum benefits of low money down and no or low PMI! Here at No Place Like Home, we offer a Veteran’s discount everyday. LINK: Special Offer.
Local Homebuying Programs: WCDA and RD
WCDA is a fantastic local program that is primarily for first-time home buyers. WCDA offers homebuyer education and a variety of loans to help fair to lower income families find affordable and long-term housing. constraint on WCDA programs are based on income and household size. They can in some cases offer 2nd mortgages for down payment assistance so it is great for cash tight families. Lastly, there are no area restrictions for WCDA but often you promise to live, not rent nor sell for about 8 years or penalties can be incurred. I have worked for and with WCDA for years and they are fantastic and understanding. The only time I’d discourage you using this loan is if you plan on renting it out your home down the line. Explore all that WCDA has to offer on their site: wyomingcda.com.
RD is another personal favorite! It stands for Rural Development and is an government program for rural areas and has income limitations. This is great for all kinds of buyers but limits where you can buy: Bar Nunn, Glenrock, Evansville, Mills and Allendale are where you can look. (Think outside Casper city bounds-anything in the county.) You can roll your entire down payment into the loan making it a $0 down program. It often has PMI or mortgage insurance that is much cheaper than FHA and online with most conventional loans.
Cash is accepted everywhere, but realistically this is most people’s best option. You’ll put as little as 5% down and reap the benefit of lower PMI or mortgage insurance and a loan where eventually the PMI can eventually be GONE. This means you’ll pay actual prinicipal faster and makes me smile a lot.
Now that you have the basics, you probably have even more questions! Terms? Rates? Lenders? Programs? This is why you partner with great Realtors like NPLHRE and a top notch lender: we know the ins, outs, norms and tricks. Take the time to get pre-qualled, understand your loan options and simplify it into three easy questions:
- What loans do I qualify for?
- What’s the monthly payment and cash out of my pocket to close?
- What locations can I look in?
It’s time to call us and a lender to go over your unique situation. Contact us today at 307-234-6659!