August 02, 2018
Of all the choices to finance your New Jersey home purchase, a conventional loan remains the most popular with the greatest majority of people. Mainly because they are less restrictive about guidelines and conditions a home must meet to be eligible for financing than a government backed FHA loan. They can save you money as well if no additional insurance costs are included.
While many choose the FHA option for the lower down payment requirements there are conventional loan programs allowing anything from 0 to 3% down payment options. These options usually do require higher credit score ratings to qualify.
However, as we pointed out in one of our earlier articles even a conventional loan may carry an insurance rider depending on the down payment percentages. Known as Personal Mortgage Insurance, the cost is most often added to the monthly payment amount. Your personal loan officer can answer specific questions and provide more detailed information.
If you’ve taken care of your credit history, or even cleaned it up before embarking on the home ownership adventure, the conventional loan benefits may be key to these advantages:
- Higher down payment = lower monthly payments
- Higher credit score = lower interest rates
- Lower credit risk = more freedom to design a loan to fit YOUR financial lifestyle needs
The less restrictive conventional loans may also come with greater flexibility about other concerns in your purchase. Things like deciding if any necessary repairs will be done by you or if you will ask the seller to participate. You may enjoy some additional freedom in negotiating those repairs and the costs involved that FHA regulates.
Beside down payment variations, you may be considering a variable rate loan rather than a fixed rate one.
Fixed-Rate Mortgage advantages include an interest rate that is set at the time of purchase and remains constant. This can be a plus when budgeting for your payments each month.
With a variable rate or ARM (Adjustable Rate Mortgage) your monthly payment adjusts over time as the rate of interest being charged is increased. One advantage to this type of loan is if you’ve found the home you want but need a lower rate NOW, it can help put you in your dream home faster.
You may also want to consider a 15 year versus 30 year mortgage and explore if that option would be advantageous to your financial situation.
While we’ve only touched the tip of the iceberg concerning financing options available to those seeking to purchase in this market, your local marketing specialist can assist you in comparing all the data of each type of loan to accomplish your home owning goal.