Welcome back, my little home buyers! Hopefully, you’ve been thinking about your current situation and whether you’re ready to purchase a home because today’s post is going to be all about the loan process and how to finance your first home!
Where to Finance Your First Home
The first question you have might be, how am I going to afford a couple hundred thousand dollars? There are a few options available to you! You can of course always go to your bank, but depending on your current credit and financial situation, you may be looking at higher interest rates. In most instances, I would recommend a mortgage company to finance your first home. With a mortgage company, you can usually expect better rates and an overall better client experience.
Now I won’t send you in there blindly, but you will find better explanations from the professionals at a mortgage company, but below I’ll explain what you’re likely to encounter!
Financing: Conventional Vs. Conforming
When you finance your first home, you’re likely to encounter either a conventional loan or a conforming loan. All this means is that a conventional loan is not backed by a government agency, whereas a conforming loan IS backed by a government agency. Let’s look at a few examples of conforming loans below!
- VA loan – This is backed by the Department of Veteran Affairs. Unless you’re a veteran, this really won’t apply to you
- FHA loan – This loan type is backed by the Federal Housing Authority (FHA)
- USDA loan – This loan type is backed by the U.S Department of Agriculture. You’re more likely to see these loans in eligible rural areas. Click the map below to see eligible rural areas in WA!
I don’t want to get into the nitty-gritty of loan types and what they all mean, your lender will be able to walk you through what loan type is best for you and what exactly that means. The reason this is important is that each loan type has specific requirements you must meet. A great example of this is the VA loan, this is a home loan backed by the Department of Veteran Affairs. If you’re not a veteran, obviously you can’t obtain a veteran loan.
Why Do Financing & Loan Type Matter?
If I’m not getting into the details of loans, you might wonder why even bring it up. Well, I bring this up because I’m a real estate agent, and if I don’t know what kind of loan you’re qualified for, I won’t know what kinds of homes to search for. This is true for all agents, we don’t just open doors, we open the right doors. If you have an FHA loan and you ask me to see a home that only qualifies for VA or a cash offer, it would be fruitless for me and for you. You want to see homes that you’re qualified for and that make sense for your financial situation. If we’re just looking at any house you like, we’re going to be looking for a long time, and more often than not, you’re going to end up disappointed.
Who Could Finance Your First Home?
The last piece of information I want to share with you is a mortgage company recommendation! With that, I’ll leave you in the capable hands of Mr. Jacek Gillispie of Summit Funding!
On that note, please never hesitate to reach out to me as well! I know there will be a lot of questions and information, but I’m always happy to share my contacts and connections!