Consider a Government-Backed Mortgage in 2011
First-time and experienced homebuyers turn to three popular government-backed home loans and refinancing options: USDA, VA and FHA mortgage programs. The reason is simple—to save money and hair follicles. In the current state of the economy, homebuyers desire to bypass the often stressful and expensive process of conventional mortgage programs.
Owning a home is a dream that most people entertain. Making it a reality takes years with the traditional route, saving up for a large down payment, repairing bruised credit and meeting high income standards. However, buyers opting for government mortgage loans realize life is short. The dream of owning a home can be accomplished in a shorter period of time with government home loans.
USDA HOME LOAN
Low-income families or individuals wishing to escape from the hustle and bustle of city living are urged to look over the USDA loan options. The U.S. Department of Agriculture backs the loan for farmers and low-income families. The USDA’s goal is to boost the economy of many of America’s rural and suburb towns. However, another purpose of the loan is to give farmers and families a chance to affordably own land or a house, which would be otherwise unattainable for certain income bracket families pursuing conventional loan routes.
USDA home loans offer attractive perks for potential borrowers: $0 down payment option, 100% financing and possible extra financing for renovations for a home or farm.
The above benefits save a USDA borrower a lot of money. If someone has saved up for a home, he or she can use those funds for other necessities. Or if repairs need to be made on a home, borrowers do not have to use out-of-pocket money.
Applicants must have good credit and debt-to-income ratio, meeting the median income requirements in the area of purchase.
THE FHA LOAN
There is no locale restriction for the FHA loan. The loan is open to everyone. The Federal Housing Administration handles the loan. The program is popular amongst buyers because of its less strict credit requirements. People with decent credit or even individuals who have declared bankruptcy could qualify for the FHA loan.
Closing costs can be included in the monthly mortgage payments; the down payment requirement is only 3.5% to 5% of the purchase price, which is a lot lower than the 20% conventional loan down payment requirement. Buyers do not need to meet a median income limit.
Like the USDA loan, FHA borrowers can use funds for renovation and repair of their new home. Also, the loan covers all different types of housing—mobile homes, factory homes, condos and single-family homes.
The FHA also offers a cool energy-saving incentive to its borrowers. For families wanting to make upgrades to a home that preserve the planet’s energy, FHA’s Energy–Efficient Mortgage program funds the initiative.
THE VA LOAN
The nation’s protectors—veterans, active duty service members and other military personnel—utilize the VA loan to buy their dream home. The loan has huge money-saving benefits.
The Department of Veteran Affairs secures the loan, causing lenders to approve the program with low interest rates, flexible payment options, reasonable closing costs, no hidden fees, less-stringent credit terms and much more. There is a $0 down option, plus monthly private mortgage insurance payments do not need to be paid. No PMI saves potential VA borrowers about $100 to $200 a month alone. VA loans are easily refinanced.
Veterans, Reservists, National Guard and active duty military members must have no record of dishonorable discharge to qualify for a VA loan.
THE BEST OPTION FOR YOU
Buying a home requires thought and certainty. Government-backed loans do not eliminate the need for clear thinking and rational decision-making. However, government loans do offer offices all over America with USDA, VA and FHA officials waiting to counsel and guide potential borrowers—a huge perk in comparison to conventional loans which often sends a buyer through the process alone with limited understanding. In fact, the smallest little mistakes could ruin a conventional mortgage loan application and set back the process. Government loan counselors help to ensure families do not make any mistakes on their applications.
Before applying, find out more information from local USDA, VA or FHA offices and their websites. Potential borrowers can also speak to lenders.
Robert Stretch is Director of Social Media Marketing for VA Mortgage Center.com. VAMC is a nation-leading VA lender, securing over $1 Billion in VA Loan financing in 2010.
