First Home Equity Loans

Different Loans for different folks… 

While they accomplish the same goal, every mortgage is different. If you are a first-time homebuyer, ready to buy a vacation home in the mountains or the beach, or maybe you are looking to buy investment property or rentals. Your financial situation will begin to dictate the type of loan you will be able to qualify for. FHA Loans are not always the best loan for a first time home buyer and if you are buying your second home, there are other options, other than a conventional loan. 

First Home Equity Loans and it’s loan officers are trained to ask questions that lead to the best solution for you. After all, more than likely you will be making loan payments to the bank for years to come, so it is important to carefully consider terms, rates and all of the small print, which could include early payoff. 

Within this post, we begin to outline some of the different loan options available. Together we will discover which one works best for you and your financial situation. 

Government Loan vs Conventional Loan

Recently we have witnessed the government giving away money because of COVID, but that is not what is going to happen here. Instead, a “Government Loan” are special programs designed to help first-time homebuyers, active military (our owner is former military and has a HUGE heart for helping vets get a loan), and those that might have low to moderate credit scores.

You’ll still work with a trusted lender when you seek a government backed loan, and will make your loan payments to that lender, not the government. 

Getting qualified is the biggest difference between the two loan types. 

Lower rates are typically a bit lower with a government loan, but they can also have additional fees. Sometimes it could be better to secure a conventional loan with a slightly higher interest rate that does not have the extra fees. PMI (Private Mortgage Insurance) might also be required depending on the program and your down payment. 

FHA – Federal Housing Administration

Many people believe that an FHA loan is perfect for first-time home buyers, but that is not always the case. Again, everyone’s financial situation is different and there could be better options. 

There are a few benefits with an FHA loan:  low, fixed monthly payments – the interest rates are typically lower than that of conventional loans. Furthermore, this loan only requires a 3.5% down payment. 

The biggest drawback with an FHA loan is the upfront mortgage insurance all bowers must pay, in addition to a monthly premium. This insurance protects the lender just in case you start missing payments on the loan, during the loan term.

Generally, buyers turn to an FHA loan when they can’t qualify for a conventional loan, or cannot afford to put down a larger down payment, such as 10 or 20 percent. As you evaluate FHA loans, here are some things to think about.

• Have you applied for a conventional loan and been denied?
  
• Are you comfortable paying the additional mortgage insurance premium?
  
• Are you aware that the mortgage insurance on an FHA loan is usually “for life”?
  
• Do you have enough money saved or gifted to cover at least 3.5% of the purchase price?

USDA – US Department of Agriculture

Our Greenville, South Carolina office does quite a few USDA loans because of the availability of land that qualifies for these types of loans. 

A USDA loan is also a government insured loan that has different requirements than the FHA loan. This loan provides financing for 100% of the home purchase price, so there is no down payment associated with this loan type. You will still need to be prepared to cover closing costs if the seller is not.

A 640 credit score or higher is the minimum score, but can vary though from lender to lender.  However, the lower the score is, the more difficult it may be to obtain an approval. These loans are specifically designed to help low to moderate income buyers in rural or semi-rural areas. The list of qualifications for both the buyer and the location of the home you’re purchasing can be quite specific. So it takes just the right combination of buyer and home to qualify for this loan type. 

VA – Veterans Administration 

The VA loan is one of our specialties, for a number of reasons. Todd Glassman, the owner of First Home Equity Loans is a retired military veteran. The entire team has a passion for serving those that have served our country. John Crivea II has taken it to another level, by becoming a Certified Military Home Loan Specialist. If you are no longer in the military and have been honorably discharged, you may still qualify for a VA loan. 

There are multiple benefits with a VA Home Loan. They can provide up to 100% financing for the full cost of the home and do not require the homeowner to pay monthly PMI or mortgage insurance. A VA Loan can cap closing costs that a veteran might pay, allowing them to be lower in closing fees, generally then other loans. 

Most every loan has a drawback, the VA loan often has a “VA Funding Fee”. There are multiple factors we will go over when we meet and consider this loan. If you are a disabled Vet, there is a chance this fee could be waived. 

Conventional Mortgage Loans

Conventional loans are not backed by the government, but actually backed by private corporations and investors. If you have steady income, good credit and some cash to use for the deposit. You must be able to pay a minimum 3 to 5 percent down payment to qualify for a conventional loan.

If you pay less than 20 percent down, you will be required to have and maintain PMI (private mortgage insurance) each month as part of your mortgage payment. This insurance can be removed during the term of the loan, once the required equity amount has been reached. The two most common ways to increase equity is by paying down the principal balance and/or increased property values which we have most certainly seen in the past few months. If you have a home loan, you might want to speak with a Greenville mortgage consultant at FHEL. 

Conventional loans typically have terms being, 10, 15 or 30 years. Often, the shorter the loan term, the lower the rate can be. Your good credit will be a significant determining factor. The better the score, the better the interest rate you can get.  

Working with First Home Equity Loans

Currently our team is meeting the needs of home buyers in four states, including South Carolina, Florida, Wisconsin, Tennessee and California. 

We will meet you where you are, learn about your dream home, discuss your financial disposition and begin to put the puzzle pieces together, so that you can make the best possible decision for what will be one of your largest purchases, your new home loan.