Buying a home can feel overwhelming at times, there is no denying that. Whether you’re a first time buyer or a seasoned home buyer, the initial process can feel frustrating and tense. It can feel like you have a million things to do before you even step foot in a house. We understand that struggle, and we want to be here to help you through that process.
First things first, finding a loan officer, or a lender, is the most important step in this initial process. Don’t know a good loan officer? No worries, we have one! Kyle Rau with First Federal Bank of Kansas City is our preferred lender. A lot of people will “shop around” for a lender. By doing this they are comparing interest rates and the overall costs of their loan. Whoever you end up going through is ultimately up to you. Your loan officer will have an important role throughout your home-buying process and will work closely with your realtor to ensure you your loan is ready to go on closing day!
So, you might be thinking, how do I know what type of loan to get? That’s a very valid and important question and is something you and your lender will talk about. However, we wanted to give you an overview of the different types of loans so you don’t feel quite so overwhelmed. Generally, there are 3 types of home loans. Of course, there are modifications but for the sake of this overview, we are going to run down the 3 most common types of loans.
First, a conventional loan. This type of loan is not insured by the federal government. So, your credit score needs to be higher and your debt-to-income ratio needs to be lower to qualify. You are a more reliable buyer in this case. Conventional loans are the most popular home financing option.
Next, FHA. This type of loan is insured by the Federal Housing Administration (FHA). It is designed for low-to-moderate borrowers, and they require a lower down payment and credit scores than a conventional loan. All these factors making an FHA loan the most popular financing for first time home buyers.
Lastly, VA loans. A VA mortgage loan is issued by private lenders and is backed by the U.S. Department of Veterans Affairs. It helps U.S Veterans, active duty services members, and widowed military spouses buy a home.
We hope that this general information was helpful for you. Of course, if you have further questions we would be happy to help. Ultimately, you and your loan officer will decide what is the best type of loan for you and your home buying needs.