If you are looking to buy your first home or upgrade to a nicer house, then there is good news for you. It’s important to be knowledgeable about all your financing options. Including mortgage loans, home credit loans and their interest rates, before making a decision. Applying for a home credit loan will give you access to funds easily and fast.
The home credit loan comes in handy when you have to meet some needs pertaining to finance. The interest charges on the home credit loan is in the range of 13 percent to 30 percent depending on the repayment tenure. The loan can be repaid within 4 years.
When you buy a house, there are different types of home credit loans mortgages that you can put into consideration as discussed below.
These types of home credit loans are for borrowers who meet standard lending guidelines. Conventional mortgages can be used to buy new or existing homes, vacant land, and even refinance your current mortgage. The minimum down payment is 20% of the purchase price (a higher if buying a property that will double as a rental).
The annual percentage rate (APR) ranges from fixed rates between three percent and five percent. Adjustable rates range from one point over Treasury securities to four points over LIBOR plus two percent. A 30 year fixed rate mortgage has an APR of around six percent on average.
The initial interest rate of this home credit loan may vary depending upon the terms negotiated with the lender by you at closing time.
These home credit loans were created by the Federal Housing Administration to help homeowners refinance their homes even if they are behind on payments but still have good credit scores. One welcome change by HARP was removing the requirement that homeowners had to owe more than 80% on their existing loans.
This means that borrowers can qualify for these loans up to a 125% loan-to-value ratio instead of just 80%. HARP is only available through participating lenders. It will require an appraisal as well as verification of income or assets before qualifying.
Now the home credit loan borrowers can refinance even if they are underwater (owe more than the home is worth). HARP also expanded eligibility so you don’t necessarily have to be unemployed or underemployed to qualify.
The VA loan program is one of the most popular in the country, with low-interest rates and no down payment requirements. For active-duty service members (it’s also available to spouses). If you’re buying a home within 12 months after separating from military service or if your veteran spouse passed away on active duty status.
There are additional benefits that make this type of home credit loan even more attractive. Just be sure to shop around since not all lenders offer VA home credit loans with bad credit scores.
If you plan on staying in the same place for at least several years down the road but want some flexibility now as far as rates go. Then a fixed-rate loan is right for you. These loans typically have a fixed interest rate and payment amount for the life of the mortgage (15, 20, or 30-year amortization).
These mortgages require lower credit scores than conventional ones only 580+. But they still have an advantage over other government programs like USDA. Because there’s nothing geographical about their eligibility. Another big potential benefit is that FHA requires just three percent down.
The downside of this home credit loan is that this loan has higher fees and can be riskier for lenders to originate. Which means it’s usually only available through a select group of banks. FHA also gives their first-time buyers who might not need all 20% down payments some options when purchasing a new house.
Without this insurance coverage from the federal government, many would be unable to buy a home. As they would not have enough money saved up for a 20% down payment. FHA-insured financing requires that borrowers put at least three percent of the purchase price into an escrow account. Which is used toward future property taxes and insurance costs.
If your income fluctuates quite a bit each month and even varies from year to year, then an interest-only. The mortgage may be more suitable than a traditional monthly repayment schedule. On some other type of residential financing.
The USDA guarantees 100 percent of a mortgage loan made by approved lenders. But no one else involved in closing your loan will receive compensation from the guarantee.
To put it another way, there’s less risk for both parties. When a lender uses its funds and makes an underwriting decision without outside assistance. If you’re planning on buying property located within a federally designated rural area, this may be an option for you.
These are just a few of the home credit loans that you should know about. The important thing is to understand what your needs are before choosing which home credit loan type will best suit you.
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