Here’s a bit of good news to guide your mindset in the right direction: buying a home has never been easier than it is today!
Whether you’re looking to buy a condominium, apartment, mansion, bungalow, or well-sized family home, seeking financing for your purchase isn’t the same arduous and anxiety-inducing process it used to be. Now that the Michigan real estate market is booming, in fact, experts believe that fate is on every aspiring home buyer’s side because there are more listings at amazing prices and more lenders with laid-back processes.
As you continue to dial in all the factors which you believe will help get the home of your dreams, you’ll eventually come to the point where there is nothing else to do but research on the right financing method to use. While there are all sorts of different plans and programs available today, however, all signs will lead you to Federal Housing Administration (FHA) and conventional loans.
This brings us to our topic for the day: what’s best for you—an FHA or Conventional loan?
Telling The Two Apart
Unless you’re a veteran or anyone that’s qualified for a specialized option, both FHA and conventional loans bear the highest value for money that makes it difficult to consider anything else. The majority of homes that are purchased annually are acquired through the use of either policy—which just shows just how helpful they can be when it comes to providing the best repayment experience.
However, you’ll also come to the point where you’ll need to choose one or the other because there’s no such thing as purchasing a single home with two different loans! With offers on your dream home piling up and the urgency to buy making itself clear, we’ve compiled this guide with everything you need to know so that you can make the most informed loan decision possible:
Conventional loans
What are they?
Conventional loans, to best put them, are the foremost example of mortgage policies in America today, thanks to their optimized borrowing experiences and widespread availability.
From a general perspective, the defining factor of these loans is that they’re more flexible with the experiences they provide homeowners because they aren’t insured or guaranteed by the federal government. Most conventional options, in fact, come in a fixed variation with a term that spans 15 to 30 years, or an adjustable variation where the interest rates can go up or down.
What makes them so special?
If you’re looking for a more convenient experience when it comes to applying and paying for a loan, here are some key advantages that make conventional loans worth applying for:
- They allow up to 97 percent financing
- They are compatible with or have HARP loans available
- They can be used for second home or non-owner occupied investment property financing purposes
Federal Housing Administration (FHA) loans
What are they?
Federal Housing Administration loans were created by the FHA to provide more affordable approaches to seeking funding by allowing aspiring homeowners to take out loans for a lower down payment.
Compared to typical loans that require 20 percent down payments upfront, the loan in question requires as little as 3.5 percent—making it perfect for borrowers with smaller savings. What this means is that you can easily qualify for assistance at an astoundingly low interest rate, even without a perfect credit score, if you pass the eligibility requirements!
What makes them so special?
Many loans may have valuable benefits and pose themselves as valuable options worth considering, but FHA loans stand out because they feature the following benefits:
- They bear a low minimum credit score requirement
- They come in fixed and adjustable-rate options
- They have a lower payment when it comes to monthly dues
- They have limited closing costs
- They bear no prepayment penalty
Home Buying with Mortgage City in Royal Oak Michigan
Buying a new home can make for a rather confusing experience because of the different decisions you’ll need to make along the way—one being the dilemma between going for FHA or conventional loans. By taking this guide and the key points mentioned above into consideration, you can best inform your financing decision and take the right steps towards ensuring an easier and smoother application and repayment experience in no time! Are you looking for a home mortgage loan program in Royal Oak that’s accommodating enough to take on low credit score applicants so that you can own your dream home soon? Get in touch with us today at (248) 930-8709 to learn more about how we can help you apply for a mortgage loan, housing loan, or refinance on your mortgage!
