Homebuyers are sometimes surprised by just how many loan options there are. While having choices is a good thing, there is no denying that sometimes, it can be hard to navigate with so many options.
If you are in the process of trying to narrow down mortgage options for yourself, you could be wondering how to go about it. In this post, we go over some things you can think about that might help you identify your ideal mortgage.
8 Tips To Narrow Down Your Loan Options
- Amount You Want to Borrow. One way to start is to ask, “How much am I trying to borrow?” This is a good way to figure out if you need to apply for a jumbo mortgage. Just check the amount you want to borrow against the conforming loan limit for your county. If it is higher than that limit, then you already know you need a jumbo loan.
- Down Payment Ability. Try and calculate how much you can afford as your down payment. Is it 3.5%? 10%? 20%? More? Nothing? Based on your answer, that can help direct your search for the right lending product. A zero down loan like a VA mortgage or USDA mortgage might be a good choice if you are struggling to afford your down payment. But an FHA or conventional loan might work as well.
- Credit Score, Income and DTI ratio. With a high income and credit score as well a low DTI ratio, you can feel confident applying for just about any type of mortgage. But if you have deficits in one or more of these areas, an easy qualification loan like an FHA mortgage, VA mortgage or USDA mortgage may be most appropriate.
- Type of Employment. Whether you are a traditional employee or you are a self-employed borrower, you can apply for the same types of loans. But in the case of self-employment, you will need to use the bank statement loan process rather than providing a W-2 form you do not have.
- Location. Borrowers who want to purchase rural homes can avail themselves of the USDA mortgage program if they also meet the income guidelines. Features include zero down, easy qualifications and affordable rates, so it is well worth considering.
- Veteran Status. Like USDA mortgages, VA mortgages do not require a downpayment and feature affordable rates and easy credit qualification. So, your veteran status and service record are important when you are choosing what type of home loan to apply for.
- Length of Stay in Your Future Home. You may be able to choose between a fixed and adjustable mortgage rate for your home loan. The number of years you plan to live in your home can help you choose between these options. For a short-term stay, consider an adjustable rate. For a long-term stay, consider a fixed rate.
- Budget Considerations. The budget you have for a home will affect your choice of mortgage with respect to the amount you will borrow, the down payment you will make, the interest rate you are aiming for, mortgage insurance and more.
First Residential Mortgage Can Help You Choose a Home Loan
If you are ready to find the right type of home loan now, First Residential Mortgage can walk you through the factors that affect qualification and budgeting for a mortgage. We can also help you assess the pros and cons of the options that are most suited to your situation.
To get started, please call (540) 838-5868 to schedule your consultation. We work with homebuyers in Blacksburg, the surrounding region, and throughout Virginia.