T.C. Wood Realty, Inc. has an excellent history of helping our clients find suitable financing. Just as each home is different, each client's needs are different. We work with numerous lenders to find the perfect package for you.
Below is information on pre-qualifying & pre-approval as well as a brief description of some of the loans available.
Pre-Qualifications
Your agent will help you pre-qualify for a loan. You will need to provide some financial information and they can tell you how a lender will look at your loan amount to be approved. This process is usually free by a lender also and can be done over the phone.
Pre-Approval
It is recommended to get pre-approved for a loan to speed up the home buying purchase. When a seller is shown two contracts, and one of them is pre-approved, often times they will take the pre-approved contract over the other contract if money is similar. Most lenders will charge you $55.00 to get a pre-approval.
FHA Loans
FHA, also known as the Federal Housing Administration, operates under the control of the Department of Housing & Urban Development (HUD) and has the primary responsibility for administering the government home loan insurance program. This program allows buyers who might otherwise not qualify for a home loan to obtain one because the risk is removed from the lender by FHA.
The most popular FHA home loan program nationwide is the 203(b) FHA home loan that only requires a minimum of 3% from the borrower and permits 100% of their money needed to close, to be a gift from a relative, non-profit organization, or government agency.
The main advantage to a FHA home loan is that the credit criteria for a borrower are not as strict as FNMA or FHLMC. Someone who may have had a few credit problems should not have a problem obtaining FHA financing. Also, FHA home loans are assumable, allowing a person to take over the mortgage without the additional cost of obtaining a new loan. In addition, the seller must pay for part of the "traditional" closing costs (called non-allowable costs) while a borrower's allowable costs can partially be wrapped into the loan. 100% of the down payment and closing costs can be gifted.
Visit the FHA website at: http://www.fhalibrary.com
VA Loans
What is a VA-guaranteed loan?
These loans are made by a lender, such as a mortgage company, savings and loan, or bank.
VA's guaranty on the loan protects the lender against loss if the payments are not made, and is intended to encourage lenders to offer veterans loans with more favorable terms. The amount of guaranty on the loan depends on the loan amount and whether the veteran used some entitlement previously. With the current maximum guaranty, a veteran who hasn't previously used the benefit may be able to obtain a VA loan up to $203,000 (depending on the borrower's income level and the appraised value of the property). The local VA office can provide more details on guaranty and entitlement amounts.
To obtain a VA loan, the law requires that:
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The applicant must be an eligible veteran who has available entitlement.
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The loan must be for an eligible purpose.
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The veteran must occupy or intend to occupy the property as a home within a reasonable period of time after closing the loan.
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The veteran must be a satisfactory credit risk.
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The income of the veteran and spouse, if any, must be shown to be stable and sufficient to meet the mortgage payment, cover the costs of owning a home, take care of the other obligations and expenses, and have enough left over for family support.
An experienced mortgage lender will be able to discuss specific income and other qualifying requirements.
Please visit the VA website at http://www.homeloans.va.gov
Conventional Loans
Conventional loans are granted to credit worthy clients with as little as 5% down. The biggest advantage of a conventional loan is you are not required to pay PMI & many times you will not be escrowing for taxes and insurance. This means your monthly payment is usually lower than with FHA or VA loans.
Unconventional Loans
Some lenders will loan B & C credit clients for a home. These are people who have had credit problems and have not established themselves completely or have not had the needed seasoning of their credit. These loans have higher interest rates and require larger down payments. After a period of time, most people will refinance to a lower rate of interest. Normal time to wait to refinance is 12 to 18 months.
Land Contracts
Seldom do we see land contracts. This is when the seller becomes the bank and carries the loan. Often people who are trying to re-establish themselves look for this type of loan. A seller can amortorize over the usual 30 years but balloon, or make the contract come due in a shorter period of time. When interest rates are very high we see more land contracts become available.
Now if you have decided on the type of loan you may want, the next thing you need to do is select a lender. Not all lenders have the track record it takes to close a loan in a timely manner. If a loan sounds too good to be true, ask around. Most agents will give you a list of creditable lenders that they work with day in and day out and they have confidence in their abilities to do the job right the first time.
