Below you will find some helpful information to use as you are preparing to own a new home.
If you have questions please call me 612-940-0780 or email Doug.Hunt@nafinc.com
CONVENTIONAL MORTGAGES
The most common type of mortgage program, fixed-rate mortgages provide you with monthly payments for interest and principal that never change. Property taxes and homeowners insurance may increase, but generally your monthly payments will be very stable.
Available for 30, 20, 15, and 10 year terms.
FHA LOANS
Federal Housing Administration (FHA) loans are the easiest type of mortgage loan to qualify for because they require down payments that are lower than those required by conventional loans, and borrowers can have less-than-perfect credit. They also provide mortgage insurance for those purchasing principal residences. Funded by lending institutions, FHA loans are insured by the U.S. Department of Housing and Urban Development (HUD).
DOWN PAYMENT ASSISTANCE (Minnesota Housing)
Intended for first time home buyers with minimal down payment required. Lower mortgage insurance and up to $10,000 assistance in down payment.
SECOND HOME MORTGAGE (lake homes and recreational properties)
Purchasing a second home such as a lake home or cabin, there are a few things that should be considered. Your debt to income ratio will be looked at to make sure you, as a borrower, will be able to pay for 2 (or more) mortgages. They will look at existing debt along with the debt you are asking to take on by purchasing a second home. As with any major purchase,they will also look at your credit score and credit history.
Owning a second home can not only be a wonderful place to vacation with family and friends, it can also be a huge added benefit on your taxes each year.
HOME REFINANCING
The process of getting a new mortgage to replace the original, allows a borrower to obtain a different and better interest term and rate. The first loan is paid off, allowing the second loan to be created.
Typically, homeowners will want to refinance their current mortgage to get out their current mortgage interest rate. Consider the timing and circumstances to determine if now is the right time to refinance your home. How long have you been in your home? And how much longer will you be there? These are great questions to answer for yourself and to discuss with your lender.
VA LOANS
Under the GI Bill of Rights, VA loans from private lenders provide eligible veterans access to a federally guaranteed, personal-occupancy home with no down payment. The guaranty protects private lenders against loss in the event borrowers fail to repay their loans, while allowing borrowers to obtain favorable financing terms.
This program was developed to offer a long term solution to American veterans and their families. VA loans do not require private mortgage insurance (PMI) which allows for larger loans with the same monthly payment.
ADJUSTABLE RATE MORTGAGE
These loans generally begin with an interest rate that is one to two percent below a comparable fixed rate mortgage. However, the interest rate changes at specified intervals depending on changing market conditions. If interest rates go down or up, your monthly mortgage payment will follow suit.
Note: there are also mortgages that combine aspects of fixed and adjustable rate mortgages - starting at a low fixed-rate for five, seven or ten years, for example, then adjusting to market conditions.
MORTGAGES FOR PEOPLE WITH LESS THAN PERFECT CREDIT
Even if you’ve been turned down for a home mortgage in the past for having less-than-perfect credit, you may still be able to purchase or refinance a home. There are new programs popping up all the time, and one might be just right for you. If now is not the time, we can help point you in the right direction.
Together, we’ll show you what it takes to improve your credit score over time so you may be approved for a mortgage in the future.
USDA HOME LOANS
The USDA Rural Development mortgage program offers zero down loan options to eligible borrowers. This is not a “farm” mortgage, but a mortgage that is designed to support the growth of housing in rural communities. Many areas in Minnesota qualify.
This program assists approved lenders in providing low- and moderate-income households the opportunity to own adequate, modest, decent, safe and sanitary dwellings as their primary residence in eligible rural areas. Eligible applicants may build, rehabilitate, improve or relocate a dwelling in an eligible rural area. The program provides a 90% loan note guarantee to approved lenders in order to reduce the risk of extending 100% loans to eligible rural home buyers.
Providing affordable home ownership opportunities promotes prosperity, which in turn creates thriving communities and improves the quality of life in rural areas.
INVESTMENT PROPERTY MORTGAGES
A loan that is secured by property or real estate. The borrower has possession of the property, home or second home, but the lender is the one who owns it until the mortgage is completely paid off.
REVERSE MORTGAGE
Instead of you paying for your home, your home pays you if you have a reverse mortgage. You may choose to receive either a lump sum of cash or a credit line for a pre-determined period of time. Eligible borrowers must be 62 years of age or older and have equity in their primary residences.
The borrower is still responsible for property taxes and insurance, but a Reverse Mortgage is an excellent way for seniors who own their home (or has very little mortgage balance) to borrow money.