Purchasing a home and mastering financial responsibility is a goal for a lot of us. Making the leap to homeownership is a big step. A home mortgage is a much bigger commitment than signing a rental agreement and it shouldn’t be taken lightly.
The huge debt a mortgage incurs can be seen as a burden, but its appeal lies in the fact that the mortgage helps you to buy an asset (your new home) with the expectation that its value will increase over time. When you enter into a mortgage agreement, it adds to your financial portfolio, gives you a big tax break and the biggest perk – it finances a place for you to live!
There are an infinite number of loan types out there, the type of home loan you choose can make or break you as a borrower, so make sure you fully understand it before making any kind of commitment.
[fusion_title margin_top=”” margin_bottom=”” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” class=”” id=”” size=”2″ content_align=”center” style_type=”single solid” sep_color=””]LOAN TYPES
[/fusion_title]The loan types you want to pay attention to are the following: FHA, VA, USDA, Conventional, and Down Payment assistant loans
[fusion_title margin_top=”” margin_bottom=”” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” class=”” id=”” size=”3″ content_align=”center” style_type=”default” sep_color=””]FHA LOANS
[/fusion_title]- Owner Occupied Buyers only, no investors
- Minimum credit score of 640. (FICO score)
- Max loan amount of $308,200
- 5% LTV (loan to value)
- 5% down payment
- Debt to income ratio (DTI) – 50%
- Sellers can pay up to 6% of purchase price towards buyers closing cost (CC)
- Buyers can use gift funds from a Family Member for down payment/CC
- Requires termite inspection report
- Allows non-occupying co-borrowers (min FICO score of 620)
- Requires PMI for the life of the loan
- Fixed and Adjustable rate (ARM) loan types
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VA LOANS
[/fusion_title]- Owner occupied buyers only
- Minimum FICO score of 620
- Max Loan amount of $424,100. Maybe higher based on VA determination
- Sellers must pay for Termite inspection
- 100% LTV
- Able to finance funding fee
- Funding fee could be waived for disabled veterans. VA determination
- DTI – 50%
- Sellers can pay up to 6% of purchase price towards buyers closing cost
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CONVENTIONAL LOANS
[/fusion_title]- Minimum of 5% down payment (95% LTV)
- Property Mortgage Insurance required unless buyer puts 20% down
- Maximum DTI of 45%
- Owner occupied or investor loan
- Investor loans are limited to 80% LTV on property
- Can finance up to 10 properties
- Fixed and ARM loans available
- Minimum credit score of 640
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CONVENTIONAL LOANS cont.
[/fusion_title]- PMI varies depending on LTV and FICO scores
- Buyer must use own funds for 5% down payment
- Loan maximum is $421,100
- Loans over $421,100 are considered Jumbo Loans
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MDHC: (first time home buyers loan) – Grant program
[/fusion_title]- Must qualify as first time home buyer
- Cash assistant program
- Non cash assistant program
- Government fixed rate of 4.5% interest rate
- Max DTI of 45%
- Up to 4% cash assistance (grant) – amount forgiven after 5 years
In addition to learning what each loan type means and which one is best for you, you will also want to take a moment to get familiar with commonly used mortgage terms. [fusion_button link=”https://buyselllivekc.com//terms-know-buying-renting/” title=”” target=”_self” alignment=”center” modal=”” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” class=”” id=”” color=”default” button_gradient_top_color=”” button_gradient_bottom_color=”” button_gradient_top_color_hover=”” button_gradient_bottom_color_hover=”” accent_color=”” accent_hover_color=”” type=”” bevel_color=”” border_width=”” size=”” stretch=”default” shape=”” icon=”” icon_position=”left” icon_divider=”no” animation_type=”” animation_direction=”left” animation_speed=”0.3″ animation_offset=””]Start Learning[/fusion_button] [fusion_section_separator divider_type=”triangle” divider_position=”center” divider_candy=”bottom” icon=”fa-chevron-down” icon_color=”#8bc34a” top_margin=”50″ bottom_margin=”50″ bordersize=”1″ bordercolor=”” backgroundcolor=”” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” class=”” id=””][/fusion_section_separator] [fusion_separator style_type=”none” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” class=”” id=”” sep_color=”rgba(255,255,255,0)” top_margin=”50″ bottom_margin=”65″ border_size=”” icon=”” icon_circle=”” icon_circle_color=”” width=”” alignment=”center”][/fusion_separator]
Are you ready to search for your future home in Kansas City?
See our full list of homes for sale here!
[idx-listings city=”Kansas City” statuses=”1″ propertytypes=”325,951,952,953″ orderby=”DateAdded” orderdir=”DESC” count=”5″]
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