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Lenders and Loans: All You Need to Know

January 15, 2024

Shopping Lenders: It's Like Finding the Perfect Fit

Why Bother?

Shopping for lenders is like trying on different pairs of shoes - you want the perfect fit. Lenders are your financial partners, and finding the right one can make a significant difference in your homebuying experience. So, why bother shopping around?

Rates: The Money Talk

First and foremost, let's talk money – interest rates, to be precise. Lenders offer different interest rates, and a lower rate means less money out of your pocket in the long run. Take your time comparing rates to find the one that fits your budget like a glove.

Programs: Tailored to You

Lenders also offer various programs designed to suit different needs. From first-time homebuyer programs to down payment assistance, explore the options available. You might find a program that eases the financial decision of entering the homeownership club.

Incentives: Sweetening the Deal

Don't overlook the incentives! Some lenders offer perks like closing cost credits or rate discounts. These incentives can make a substantial impact on your overall costs, so keep an eye out for these hidden treasures.

Loan Types: Your Guide to Home Financing

Now that you understand the importance of shopping lenders let's dive into the world of loan types. Think of it as choosing the right tool for the job – each loan type serves a different purpose.

Conventional Loan – The Classic Choice

Key Features:

-Flexible Terms: Conventional loans offer various term options, allowing you to tailor your mortgage to your financial goals.

-Private Mortgage Insurance (PMI): While conventional loans may require PMI for smaller down payments, once you reach a certain equity level, you can often eliminate PMI.

-Stable Interest Rates: Conventional loans often come with stable, fixed interest rates, providing predictability over the life of the loan.

Ideal For:

-Financially Stable Buyers: Suited for those with a solid financial foundation.

-Buyers with Larger Down Payments: Ideal for individuals who can afford a larger down payment, potentially avoiding PMI.

VA Loan – Honoring Service Members

Key Features:

Zero Down Payment: VA loans offer the incredible benefit of requiring no down payment, making homeownership more accessible for eligible veterans and active-duty service members.

Competitive Interest Rates: VA loans often come with competitive interest rates, providing additional financial advantages for those who have served.

No Mortgage Insurance: Unlike many other loan types, VA loans typically do not require private mortgage insurance (PMI).

Ideal For:

Veterans and Active-Duty Service Members: VA loans are a fantastic opportunity for those who have served in the military.

Buyers Seeking No Down Payment Options: Perfect for individuals looking to buy a home without a substantial upfront payment.

USDA Loan – Rural Bliss

Key Features:

-No Down Payment Requirements: One of the most attractive features – you can secure your dream home without having to make a hefty down payment.

-Flexible Credit Terms: USDA loans are more forgiving when it comes to credit scores, making homeownership achievable for a broader range of buyers.

-Rural Eligibility: Geared towards properties in designated rural areas, providing an opportunity to embrace a tranquil lifestyle.

Ideal For:

-Nature Enthusiasts: Those seeking a home in the serenity of rural areas.

-Budget-Conscious Buyers: Perfect for those looking to minimize upfront costs.

Check if you're eligible for USDA here: https://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do

FHA Loan – Entry Level Ease

Key Features:

-Flexible Credit Requirements: Perfect for those with less-than-perfect credit, as FHA loans are not considered risk based, so if you have a 580 credit score, you have the same mortgage insurance as someone that has an 800 credit score

-Assumable Mortgages: FHA loans are assumable, meaning that in the future, a buyer can take over your existing FHA loan.

Ideal For:

-First-Time Buyers: An excellent starting point for those entering the housing market.

-Buyers with Limited Savings: Ideal for individuals with a smaller down payment budget.

Down Payment Assistance Programs (Including CHFA)

Key Features:

Low-Interest Rates: Some down payment assistance programs, like CHFA, offer competitive interest rates, helping you save money over the life of your mortgage.

Tailored Programs: Down payment assistance programs are often used in conjunction with FHA or Conventional loans. For example, many homebuyers opt for an FHA 30-year fixed loan with CHFA Down Payment Assistance (DPA). CHFA isn't a standalone loan but a supplement to FHA or Conventional loans, enhancing affordability for homebuyers.

Accessibility Beyond First-Time Buyers: With programs like CHFA's Smart Step, you don't always have to be a first-time homebuyer to qualify for down payment assistance. Even if you've owned a home before, you can still benefit from the program.

Educational Resources: These programs often offer educational resources to empower homebuyers. Take advantage of valuable insights to navigate the process with confidence.

Ideal For:

Residents in Specific Areas: Different programs cater to residents in particular regions, like CHFA in Colorado.

Buyers Seeking Additional Financial Support: Ideal for those looking to enhance their financial capacity through down payment assistance.

Flexibility Beyond First-Time Buyers: Perfect for individuals, including repeat homebuyers, looking to benefit from down payment assistance.

There you have it – a comprehensive guide on shopping for lenders and understanding different loan types! Remember, your journey to homeownership should be exciting, not overwhelming. Take your time, explore your options, and before you know it, you'll be unlocking the door to your very own home sweet home! 
If you want to learn more about loan types, check out this video where our preferred lender Billy Campbell from Primary Residential Mortgage Inc. breaks it all down: https://youtu.be/kC0gXK2xpVM?si=WJOA8ygqRD7UXXLf&t=60

Annie is the best and I could not imagine this process with out her! When I first walked in to Lupton Village office, Annie never looked at me as too young to buy, she always treated me as a potential buyer. She took my dreams of being a homeowner by the age of 21 and made it happen. She always made sure I was in the loop and updated on the progress of the house! My unit was popular amongst other buyers but Annie was honestly the reason I went under contract that day. I will forever be grateful for Annie and the fact that she made sure I got my dream first home by the age of 21!

The Sianis Family | Fort Lupton, CO - Lupton Village Townhomes