{"id":77,"date":"2015-03-15T14:04:13","date_gmt":"2015-03-15T14:04:13","guid":{"rendered":"https:\/\/jackiehward.com\/?page_id=77"},"modified":"2015-03-15T14:04:47","modified_gmt":"2015-03-15T14:04:47","slug":"what-loan-options-are-available-the-basics","status":"publish","type":"page","link":"https:\/\/jackiehward.com\/?page_id=77","title":{"rendered":"What Loan Options are Available? The basics…"},"content":{"rendered":"

So you have made the decision to enter into the real estate market – you want to buy a home.<\/strong> This opens a flood gate of questions. \u00a0One of the first that needs to be addressed is, \u201cHow will I pay for this investment?\u201d \u00a0Many people lock themselves out of the real estate market because they do not think they can afford to buy, but there are many loan options for buyers.<\/p>\n

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The most common loan is a conventional loan.<\/span> \u00a0The conventional loan uses Fannie Mae or Freddie Mac guidelines for conforming loans. \u00a0As of right now these guidelines look like the following: \u00a0The minimum down payment for a loan up to $417,000 is 5%. \u00a0From $417,001 up to $625,000 the minimum down payment is 10% and from $625,001 or more – a jumbo loan – requires a minimum down payment of 20%. If the loan amount is between $3-4M the accepted minimum deposit is variable, but respectively higher as well.<\/span><\/p>\n

As of right now you may be thinking \u2018awesome I can get a loan for $200,000 and all I have to get together for a down payment is $10,000 – Maybe I can swing this!\u2019 \u00a0There are secondary fees to consider and those include PMI, private mortgage insurance, and bank fees. \u00a0In short PMI is an insurance paid for the bank taking the risk on a homeowner to make good on the loan payments. \u00a0\u00a0It insures the bank for up to 80% of the home\u2019s value if the homeowner defaults on the loan if the loan if for the full value of the home.. \u00a0PMI can be between 0.3 – 1.75% of the original loan amount per year.<\/span><\/p>\n

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Using the same example as above that would be $200,000- $10,000= Loan amount of $180,000<\/span><\/p>\n

$180,000<\/span> *\u00a0 1.75% = $3,150 per year. \/12 months =$262.50 per month. <\/span><\/p>\n

Tack that onto your $890.77 \u00a0mortgage payment and you have your monthly payment.<\/p>\n

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Once the loan amount is less than 80% of the value of the home the PMI can be eliminated.<\/p>\n

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A popular loan for first time home buyers is the FHA. <\/span>This is a popular loan for 1st time home buyers because generally speaking 1st time home buyers have less saved funds, \u00a0have not built as much credit and this program has a lower credit score requirement, less money down, and more lenient debt to income requirements. \u00a0However FHA loans have some drawbacks to protect the lenders. Foremost, there is a 0.85%<\/strong> upfront fee at closing. The home also must appraise for the cost of the loan and must meet basic condition requirements. \u00a0Back to the benefits though! \u00a0The minimum down payment is only 3.5%, so back to the earlier example that is only a $7,000 down payment on a $200,000 loan! \u00a0Some people that use this option do so as a way of entry into the market. \u00a0After some time of making good payments and building good credit, you can refinance for a conventional loan and if your loan-to-value has risen you may not even need to pay the PMI, as well as the renewal premium you will be rid of.<\/p>\n

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There are many other loan types out there, but having knowledge of the two most common will help you on your way to getting your new home and a great investment.<\/p>\n

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*Mortgage Insurance Premium adjusted for the 01\/08\/2015 HUD announcement.<\/p>\n","protected":false},"excerpt":{"rendered":"

So you have made the decision to enter into the real estate market – you want to buy a home. This opens a flood gate of questions.  One of the first that needs to be addressed is, “How will I pay for this investment?”  Many people lock themselves out of the real estate market because … Continue reading What Loan Options are Available? The basics…<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":78,"parent":74,"menu_order":1,"comment_status":"open","ping_status":"open","template":"","meta":{"footnotes":""},"class_list":["post-77","page","type-page","status-publish","has-post-thumbnail","hentry"],"_links":{"self":[{"href":"https:\/\/jackiehward.com\/index.php?rest_route=\/wp\/v2\/pages\/77","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jackiehward.com\/index.php?rest_route=\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/jackiehward.com\/index.php?rest_route=\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/jackiehward.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/jackiehward.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=77"}],"version-history":[{"count":2,"href":"https:\/\/jackiehward.com\/index.php?rest_route=\/wp\/v2\/pages\/77\/revisions"}],"predecessor-version":[{"id":80,"href":"https:\/\/jackiehward.com\/index.php?rest_route=\/wp\/v2\/pages\/77\/revisions\/80"}],"up":[{"embeddable":true,"href":"https:\/\/jackiehward.com\/index.php?rest_route=\/wp\/v2\/pages\/74"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/jackiehward.com\/index.php?rest_route=\/wp\/v2\/media\/78"}],"wp:attachment":[{"href":"https:\/\/jackiehward.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=77"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}