Owning a home is generally costly. However, there is no better investment than a home that you can call your own. Whether it’s a residential or commercial one, it’s always worth it. You can always sell it and invest the money if you choose to.
Although it’s expensive to build or to buy a home, you can always get funding. You probably have heard of different home loans but are not sure what to go for. Inasmuch as the options are many, they are designed for specific individuals. In addition, they all have their own shares of pros and cons. So, you just need to identify the home loan that is designed for your needs and one that you can repay comfortably.
Here are three broad categories to consider:
1. First Home Buyer Loans
From the name, these loans are designed for individuals who have never owned a home before. They are meant to help you save big as you pay reduced interests. The most popular options are:
• Federal Housing Administration (FHA) Loan: Offered by the government to individuals with a credit score that is at least 580. They enjoy as low as 3.5% interest rates.
• Veterans Affairs (VA) Loan: Offered to veterans and their surviving members to help them build a house.
• Us Department of Agriculture (USDA) Loan: Offered to rural settlers. You can get up to 100% property financing.
2. Mortgage Refinance Loans
When you already to have a home loan that you are paying back but are finding it hard to meet the terms, then a mortgage refinancing program may be ideal. The commonest programs in this category are:
• Home Affordable Refinance Program (HARP): This program if for struggling borrowers. It enables you to refinance your existing home into a lower rate.
• Rate and Term Refinance: This program requires you to pay off your conventional loan, mostly the FHA loan, and replace it with a fresh one that enjoys reduced rates.
• Cash-in Refinance: This program allows you to inject cash into your loan program so as to reduce the balance to a specific limit.
• Cash-out refinance: This allows you to pull out some cash from your existing loan program.
3. Investment Property Loans
If you are targeting to get into real estate and you don’t have enough cash, then you need an investment property loan. The loan may be a:
• Conventional Loan: Offered by private entities to real estate investors with a good credit score (620-640).
• Private Money Loan: Offered by non-professionals who have extra cash to invest in real estate.
• Hard Money Loan: Similar to conventional loans, only that the credit scores do not matter. What matters is the value of the property that you want to buy.
• Home Equity Loan: This requires you to place your home as equity to get a real estate loan.
Clearly, there is a home loan for everyone. You just need to identify one that is ideal for you and discuss the terms with your lender. In the end, the most important thing is that the home loan that you apply for enables you to own your target property.