William Ryan Homes understands you may have many different questions when it comes to buying your new home. An important question we often get asked is about financing options. There are many different paths to financing your home and you may be curious which one is right for you. Luckily, we have partnered with Mutual of Omaha Mortgage and formed Home Loan Express. We make it easy to finance your William Ryan home and are here to help with any questions you have. Let’s start with explaining different types of mortgage loans.
FHA Loans
FHA home loans are insured by the Federal Housing Administration, an agency within the U.S. Department of Housing and Urban Development (HUD). FHA loan programs are designed to help people that do not meet requirements for conventional home loans. FHA loans are a good option for younger, first-time home buyers that may not have a lot of cash or savings or have a lower credit score (600 FICO).
VA Loans
VA Loans are backed by the government and only available to active-duty service members or veterans of the US military and their surviving spouses. VA loans are partially backed by the Department of Veterans Affairs (VA) and are issued by private lenders. Your lender will set the mortgage rate and discount points, but, in general, the interest rates are lower relative to conventional loans. The amount a lender will approve will depend on financial history, down payment, and credit score.
Conventional Mortgages
A conventional mortgage is guaranteed by either Fannie Mae or Freddie Mac (unlike an FHA loan or VA loan). Conventional home loans are designed for borrowers with good or excellent credit, and offer rates based on credit. Also known as conforming loans, conventional mortgages generally pose fewer hurdles than FHA, USDA, or VA mortgages, which may take longer to process.
Jumbo Loans
If the value of the loan you need is too expensive for a conventional loan, then a jumbo home loan may be an option. Jumbo loans have stricter qualification rules, though. Credit score requirements are typically no lower than 700, and you will need to document income and assets. The maximum debt-to-income (DTI) ratio for jumbo loan borrowers is 45%. Jumbo mortgages are not securitized with Fannie Mae, Freddie Mac or FHA. They are backed by private investors, so there is no guarantee provided.
Adjustable Rate Mortgages
Adjustable Rate Mortgages, known as ARMs, feature an interest rate that adjusts over time based on the market. ARMs start with a lower interest rate than fixed-rate mortgages, so an ARM is an option if you want the lowest possible mortgage rate starting out. After the initial period, your monthly payment can fluctuate periodically. ARMs are available with all mortgage products but are limited with FHA, USDA and VA mortgages.
USDA Loans
The primary purpose of the USDA home loan program is to help smaller, rural areas by making homeownership more affordable for low-income families. If your property is in a designated USDA rural area, then you could qualify for a USDA loan. USDA mortgages are government-insured and allow borrowers to purchase new homes with no money down, low-interest rates, and up to 100% financing for qualified buyers. USDA loans require private mortgage insurance.
Before you begin looking for a home, you should have all of your financial ducks in a row. That way, once you've found the perfect home, you can sail through the loan process. Among the information and documentation you should have prepared are the following: a pre-approval letter, knowing how much home you can afford, credit score requirements, income requirements, and down payment requirements.
William Ryan Homes is happy to work with you to finance your new home with us. We build homes in several areas across the country, so browse our website to find the ones you love, then contact us for more information.
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