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    How to Find the Right Mortgage for Your Dream Home

    When you’re ready to finance your Dream Home, your choice of lender and mortgage loan will be decisions you’ll live with for decades to come. Fortunately, finding a great lender is easy, thanks to professional mortgage advisors like LendingShops.com. As for choosing the right type, this article will compare the four most common mortgage loans, to help you find the best fit for your financial situation and goals.

    Conventional loans

    The most flexible type of mortgage is a conventional loan. If you have a top credit score (620 or higher) and if you have cash savings for a larger down payment, this type of loan may be the best for you. If you can put down 20%, a conventional mortgage won’t require adding private mortgage insurance (PMI) to the monthly payment. Or, with the PMI premium, you can reduce the down payment to as low as 3%.

    One advantage of conventional loan flexibility is the freedom to use your property as you wish. Your dream house can be your family residence, a vacation place, a rental or a resale “flip” investment. These wide-open options make a conventional mortgage one of the most popular.

    FHA loans

    If you don’t have a high credit score and plenty of cash saved for your down payment, an FHA loan may be the best for you. FHA loans were created by the Federal Housing Administration to make home ownership possible for families with lower credit scores. You can qualify with a score of 580 and a down payment as low as 3.5%. With a larger down payment, a score as low as 500 may qualify.

    FHA loans may only be written for the borrower’s primary residence, and there are tighter limits on the loan amount. Since a lower credit score is considered a higher risk, FHA loans require an up-front PMI payment (currently 1.75% of the loan) as well as a monthly premium on top of your payment. Still, FHA loans offer fixed or adjustable rates, 15- or 30-year terms, and many other popular loan features.

    VA loans

    After World War II, the GI Bill created VA loans to give active or retired military personnel the opportunity to buy a home with no money down and no mortgage insurance premium. This is a great way reward our veterans, and if you have served, you are eligible.

    Qualifying requirements (for the borrower and the property) are strict. The VA wants a minimum credit score of 620, and the property must receive a special appraisal and inspection, which can make it tougher to win approval.

    USDA loans

    If your town has a population under 10,000, you may qualify for a loan backed by the Department of Agriculture. Designed for rural and low-income buyers, a USDA loan requires no money down.

    USDA loans charge an upfront PMI premium (currently 1% of the loan amount) and they will carry a monthly PMI premium. These payments will make your mortgage cost a bit more over the life of the loan, but if you fit the borrower profile, a USDA loan can unlock the door to your Dream Home.

    Now that you know the basics of the Big Four, let a LendingShops advisor help you find the right lender. You can set up an appointment online at www.LendingShops.com or call us today at (972)458-8888.


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