Getting ready For Your Home Loan - Any major purchase requires research, careful analysis, consideration, and thought. Home buying is a process and it's important that we help you understand every step in the process. The most important issues are:
Qualifying For A Loan To See What You Can Afford
Analyzing Your Finances To See How Much You Want To Spend
Determining How Much Down Payment You Can Make
Choosing a Loan Type That Fits Your Needs
Qualifying For A Loan - Speaking directly with a loan officer you can get pre-qualified. That means you can start looking at homes you are interested in. And you typically you only need your past two W-2's, bank account statements, and pay stubs. next you will need to be pre-approved - which means you are approved for a loan and it makes your offer toby much stronger.
Analyzing Your Finances - Determine your price point for a budgeted monthly payment based on your debt-to-income ration. Although you may be pre-qualified to buy a mortgage that is $2,300 a month, you might consider a lower monthly mortgage to meet a comfortable budget for you and your family. Locking in to a 30-year mortgage is a huge commitment so make sure you are comfortable with this.
Down Payment Options - The amount you pay up front is deducted from the total amount of your mortgage and represents the beginning equity - your ownership stake in the home you buy. If you choose a 20% down payment you'll get a better mortgage rate and lower monthly payments. However, there are other costs to consider such as closing costs and earnests money - so be sure to look at all costs before you finalize how much down payment you will make.
Which Type of Loan Fits Your Needs
In Hawaii the major types are Conventional Loans, VA Loans, USDA Loan, FHA Loans and GSE-backed loans. Here is a brief description of each loan type, but please talk directly to a qualified lender to see which one best fits your portfolio.
Conventional Loans - This type of loan include mortgages that are not government insured and are typically fixed rate. Although they typically require a 20% down payment and higher credit scores, they exclude any need for private mortgage insurance.
VA Loans - Veterans and active duty service members, with a COE, can qualify fo this loan that requires no down payment and no mortgage insurance.
USDA Loans - Homebuyers in specific boundaries, mostly in West Oahu from Ewa beach to the west side, are allowed to qualify for home loans offered by the US Department of Agriculture (USDA) that offer low rates, no down payment and 100% financing.
FHA Loans - this type of loan offers a 3.55 down payment outage but only though participating lenders. These are much easier to qualify for and have slightly lower rates than you would fin with conventional loans.
GSE-backed Loans - Qualified applicant can make a 3% down payment for these Fannie Mae and Freddie Mac loans.