Mortgages Homeowners Love
Since 2020, low rates are causing influx of Northern Colorado home sales where payments are attractive and affordable. Homeowners are loving it too as they’re taking advantage of refinancing as well as buying. Many Realtors® and mortgage brokers are pining with deals on the market for their clients proving fruitful without breaking any hearts. Many property owners seeking current terms making them fall in love with their home all over again. Alright, Enough with the mushy stuff, we’re talking serious business here! We have outlined a few mortgage tips and advice for Northern Coloradoans to mull over. These are mortgages homeowner’s love and you might too after finding out your options. Read on to learn about financing in today’s real estate market and how these loans can benefit you.
- FHA Loan
- Adjustable Mortgage
- Fixed Rate
- VA Loan
- Reverse Mortgage
- USDA Loan
- Bridge Loan
FHA is Love at First Sight for First Time Buyers
An FHA or Federal Housing Administration loan provides options where you can put down as little as 3.5% which is a HUGE reason people lean on an FHA as first-time homebuyers. There are requirements the recipient follows for approval, such as mortgage insurance. Therefore, many newer buyers will have to pay a first and second on their properties to qualify. However, after a few years the homeowners can merge the loan into one if they meet all the bank’s current specifications. These loans are typically 15-30-year fixed-rate loans where you won’t have concern with the market’s fluctuating landscape.
Adjustable Rates Could Break Your Heart if You’re Not Careful
Adjustable mortgages are yet another way for clients to finance a home without spending beyond means. However, this home loan is best for someone who either plans to refinance within 2-5 years or sell within that same time frame. Sort of like casual dating without the long term commitment. The trick is, keeping up on your payments to avoid disastrous outcomes. A loan like this may not be good for those looking to stay put for 10+ years unless you refinance before the second or third year. Also, with an unpredictable market, you might be better with a fixed mortgage as no one can ever know what’s coming next. For buyers who are strictly investing, this loan might work like a charm.
Fixed Rates are More Reliable for a Long Term Relationship
Fixed Rates are ideal for those looking to maximize their investment over 30 years. It is also the safer way to go financially, when comparing with an adjustable mortgage. With the current rates at an all-time low of 3.5% (subject to change and based on credit) it’s not surprising how many people are doing a Re-Fi or purchasing their first or secondary homes. (If the rates drop any further, the banks will pay the home buyers!!) With all due respect, long haulers tend to stick with fixed rates providing security without changing monthly payments.
VA Loans are True Blue for Military and Spouses
VA Loans are yet another way to qualify for a home loan. However, you must be active or a veteran to meet requirements. National Guard and Reservists may also take advantage of a VA Loan. Not too many people realize if you’re a spouse of a veteran who is disabled or lost life during duty can apply for these types of home loans. You will still need to meet the other pre-qualifications for things like credit. Many of the Vets we work with feel these loans are most suitable for their situation. Be sure to check out the other perimeters with a qualified loan officer ensuring this is your most suitable option.
Reverse Mortgages Need Attention
Reverse Mortgages can be useful for borrowers depending on circumstances. This loan allows you to live off the equity of your home while staying in the house. We primarily see elders applying for this financing, as they may not be interested in selling or have saved enough throughout the years. Oftentimes, seniors are looking to downsize where a reverse mortgage may not be their best option. Moreover, these can be tricky loans where you need to speak with your mortgage broker or financial advisor understanding the perimeters. It might make more sense to sell and use the equity for income as an alternative.
HELOCs Can Be Heartaches or a Mortgage Soul Mate
HELOCs or Home Equity Line of Credit are useful for home remodeling and other investments. However, you must pay close attention to the term and conditions under which you’re approved. Also, your loan to value can’t be upside down to qualify. This is primarily a second mortgage where you also need to be conscious of how it affects your credit score. Meaning, this loan will hit the FICO similar to a huge credit card balance, which can ultimately lower your score. Paying on time is imperative, and paying it off as soon as possible is recommended by many mortgage lenders.
USDA Loans Help with Rural Development
USDA Loans are very popular these days, as they’re typically a zero-down loan. However, this doesn’t negate your responsibility to pay closing costs. There are several USDA loans, including a rural repair and rehabilitation loan. You also have to make 80% less than the median income of homeowners in the same area. More importantly, this can be an ideal way to go for those earning less income. Pay attention to this tidbit from a www.ruralhome.org:
“Rural Repair and Rehabilitation Loan and Grant Program” provides financial assistance to very low-income homeowners unable to finance necessary repairs through other sources. Loans are used to make general repairs and improvements or to remove health and safety hazards.”
Gap and Bridge Loans are Time Sensitive
A Bridge Loan is another loan that is time-sensitive when you can pay. Since this is a short-term loan, you’ll have the options to pay it off within 2 weeks–3 years, depending on your bank and qualifications. This type of loan is also known as ‘Gap or Wrap’ financing. Homeowners transitioning from property to property and making payments on current mortgage may seek this alternate route. Please note: Its sometimes hard to qualify for two mortgages, therefore homeowners and loan officers need to sell immediately. Again, it’s always best to consult with a professional before taking on additional properties.
This information is the easiest break down for some of the most popular loans available, but there are other mortgages out there. Be sure to get a consultation or pre-qualify before home shopping or if you’re looking to re-finance. As smart consumers and homebuyers, we’re certain you want to be as educated as possible. Watch for our next article to learn how to navigate through the ever-changing real estate market.