Realty Executives

Your Loan: The First Step to Buying a New Home

by Susan Christy 09/06/2020

Photo by Nattanan Kanchanaprat via Pixabay

If you’re in the market to purchase a home, it can be a confusing process. Interest rates, types of loans and what may apply to you can all sound like a foreign language. It’s always best to have some background knowledge before going to see a mortgage broker to make sure you’re on the same page. Although there are many components to the process, one of the main elements that directly affects you is the type of loan you qualify for. Here’s a quick guide:

  • Land Purchase

You may want to build a home on a specific piece of land. Most banks offer up to 85% of the price of the land for residential and investment purposes.

  • Home Purchase

These loans finance the purchase of a new residential property or home from previous owners. There are many categories: fixed-rate, adjustable-rate, conventional, jumbo, FHA, VA, USDA and bridge. Each one has elements that mortgage brokers use to determine whether you would be a good candidate for that type of loan.

  • Home Construction

If you’re looking to construct your home from the ground up, this is the type of loan you will be considered for. The loan and application process is a little different from a standard home purchase loan. If you want the loan to be included as a part of the total price of the house, the land should have been bought within a year.

  • Home Expansion/Extension

Even if you’re purchasing a home, you may decide you need to expand it. These types of loans work differently if you are purchasing the home, so working with a mortgage broker will provide more insight.

These four loan options may directly impact your decision and ability to purchase. When considering the type of loan you are seeking, you should also think about where you want to live and how long you plan to stay there. Each specific type of mortgage loan may require different amounts for a down payment, have different standards, require mortgage insurance and interest.

The type of mortgage loan and interest rate will also affect your monthly payment. A mortgage broker should be able to help choose wisely to save money in a number of areas. The most important thing to remember when searching for a home loan: they are not one size fits all. Every home loan is dependent on your current circumstances, credit rating and income level.

Everything may sound confusing right now, but you have a good foundation to work from. As your mortgage broker walks you through the process, you'll be able to identify those loans that may be mentioned without feeling like you're lost. Being educated on what's out there can also help ask the right questions. Although a mortgage broker is designed to help you get the loan you want, they also want to make money too. Working with one that appreciates your knowledge (even if limited) is key. Good luck!

About the Author
Author

Susan Christy

 Hello, and thank you for visiting!

When it comes to real estate experience, few compare to Susan Christy. As a full-time Realtor for over 30 years, Susan has been successfully selling and finding homes for her clients since 1987, and her in-depth knowledge of the real estate process is hard to match. There are few challenges Susan hasn’t experienced and successfully resolved. She has not only the expertise to seamlessly close a real estate transaction, but the personal skills to instill a comfortable confidence, putting her clients at ease. She carefully listens, puts a plan in place, and follows through to the close of escrow and beyond. Susan is the real estate professional with the tact and skill to negotiate the highest return for her sellers and best possible price for her buyers: the true professional you want on your side.