Three Types of Loans to Help Young Buyers into Homeownership

The road to homeownership can seem pretty steep to young, potential homebuyers. Their lives seem fairly stable but there are some factors that give them pause:

  • The economy isn’t growing at a comfortable rate.
  • The job market offers slim pickings at best.
  • Low consumer confidence in the housing market
    and other economic areas.

With all this said, right now is actually an excellent time for new homebuyers; perhaps the best opportunity they’ll get in their lifetime and they should know not to miss out.

There are three solid loan choices to help young, new homebuyers dive into this “market of a lifetime.” Let’s review:

1. VA loans

Available to veterans and guaranteed by the U.S. Veteran’s Administration, VA loans frequently offer interest rates that are lower than those of conventional loans, and don’t require private mortgage insurance requirement, which saves you additional money each month. The government-backed loans are available to veterans, reservists, active-duty personnel, and surviving spouses of veterans, and require no down payment, no cash reserves, and no application fee. Also, the seller is required to pay certain closing costs, which decreases the closing costs for the borrower as well. You can also cash out a certain portion in order to pay off some consumer debt with the refinance loan program. WJB offers the VA Interest Rate Reduction Refinance (IRRRL) loan program, which can significantly reduce the interest rate on an existing VA loan.

2. FHA loans

FHA loans were created to help borrowers who wouldn’t otherwise qualify for a traditional home loan or would be subject to higher interest and high mortgage insurance. Available as 30- and 15-year fixed-rate loans as well as 3/1 and 5/1 ARMs, the loans require only a 3.5 percent down payment, which can be from a qualified gift, and there are no income limitations. These loans offer flexible underwriting, and a non-occupant family member may co-sign (for single-family homes only). Property condition standards are much more relaxed than they used to be for these loans, and borrowers can even roll in non-structural rehab work totaling up to $35,000 on the home. Also, the federal mortgage insurance for these loans is usually much less expensive than private mortgage insurance (PMI), which saves you some money.

3. Loans with 97 percent loan-to-value

These loans are just what they say: they let you finance up to 97 percent (with DU approval only) of the home’s value, which makes them an excellent start for young homebuyers wishing to buy, but not having much for a down payment. With only 3 percent down, you can finance the purchase of a single-unit primary residence with a price tag of up to $417,000.

Mortgage insurance companies may have additional guidelines.
Please contact me with any questions to guide you to my proffered lender 951-634-8843

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