How to finance a home in Birmingham or Hoover Alabama
If you're like most Americans you may not have a couple hundred thousand dollars in cash sitting around ready to purchase a house; many times it's tied up in another home or you will simply need to apply for a home loan. There are several different types of loans and within each of them there are different options and programs depending on the situation.
A conventional loan is probably the most common and typically requires 10 to 20% down payment. This is a good option if you're selling another home and rolling over the equity into a new home or you have saved the 20% and can invest it directly into another home. Interest rates are typically lower and fees and points may vary depending on where to get the loan.
An FHA loan is the government loan that allows for only 3% down but these types of mortgages require mortgage insurance. This is due to the fact that the home does not have the instant equity as a conventional loan would have. The lenders are protecting themselves in case of default. The rates on an FHA loan are typically a little bit higher than conventional.
USDA home loan is also a government loan that allows for zero down payment but the requirements for the type of house are restrictive. Typically, the home needs to be within city limits and it needs to be up to certain standards as far as condition.
A VA loan is for military personnel and has a lower interest rate and the seller typically pays the closing costs area these homes to must meet certain standards for quality and condition.
Where to get a mortgage
There are several places to get a mortgage, a bank, credit union, mortgage brokers, or owner financing.
A bank or credit union will typically have lower fees and points but their rates are set in stone for that day. You will want to lock in a rate and a low percentage and have the loan officer that works for the bank draw up all the necessary paperwork
A mortgage broker or officer have access to hundreds of loans and banks and will be able to find you the best rate through the best a bank out there. Because of this rates and fees tend to be a little bit higher upfront but you content to save money in the long run with a lower percentage rate.
Owner financing is probably the most rare in that the seller actually carries the loan. The only reason you would want to do this type of a loan is if you have been denied elsewhere and the owner is giving you a chance. The rates are usually much higher and the owner takes the responsibility and risk in case of default.
Finding the right home loan and mortgage for your situation may take some time so shop around. This is a very large investment and you want to make sure your money and you are taking care of.
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