Monday, February 18, 2019 / by Zak Allen
1. Conventional Loans
Conventional loans are loans that are not funded by the Federal Government. You typically will have better rates with going this route, even possibly lower loan fees. There are two types of conventional loans: conforming and non conforming. Unlike other loans , here if you have 20% down or more, you can escape PMI insurance which will save you 50-150 dollars a month. PMI which means: Private mortage Insurance, is insurance that which in short pretty much protects the lender if you default (stop paying) your loan. The type of people who will end up getting these loans are buyers with: strong credit, a stable income and employement history, and a down payment of 3 %. Besides cash buyers as a seller this is the best buyer you could ask for.
2. FHA or VA
These loans are Government-insured mortgages. While the government isn't a lender themselves they do play a big roll in people getting loans. The Federal Housing Administration (FHA) is the agency that backs first time home buyers. This type of loan is perfect for first time home owners since most of them don't have a large downpayment. These buyers also don't need a prime credit score. If you have a 580 score you still get a great rate, you can even get a loan with a 500 score if you have at least 10% down!!! When you're selling your home these buyers aren't bad, but it can get a little bit more complicated because it will need to pass an inspection from an appraiser. The nice thing about the first time buyers now is they have a way to get down payment assistence to where they can get the 3.5% down to qualify or even get help with closing costs. Now FHA isn't only first time buyers it can also be good for people with low to moderate incomes, but when you are selling you will not need to worry about these factors it doesn't not mean they can't buy or you won't sell your home! The other type of government-issued mortgage is a VA loan. VA loans are only available to those who are in the US military so unless you're selling to someone who is in the military are you are also in the military you may never see this kind of loan type.
If any of you have any more questions other than these basics please feel free to contact me and I will direct you to my trusted lender. There's many ways to structure a loan, but these are some very typical things you'll see when you sell your home coming from buyers!