Real Estate
September 20, 2017
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How to pick the right mortgage

By: Scott Sheldon
August 25, 2017

With the proliferation of new home buying programs being introduced into the market, consumers today have more choices for securing financing than ever before. 

Here is how to pick a mortgage loan program for your unique financial profile…

Know this - take peoples thoughts and opinions with a grain of salt. Before you start looking at loan programs keep your business to yourself. If you happen to share your mortgage plan with anyone including friends and family, everyone will have an opinion of what you should or should not do with your loan. Unless these people are making a mortgage payment for you, take their opinions in stride. While this might sound harsh, the reality is that these people have no financial responsibility for the obligation you’re about to consider taking on. That said, following are some financial profiles and recommended loan programs to help you choose what program is most suitable for you and your family.

If you have stable income, great credit, down payment and little to no debt:

Then a conventional loan is likely your best bet.

If you have stable income, great credit and no down payment and little to no debt:

Then a conventional or FHA loan with down payment assistance could be your best bet or a USDA 100 percent financing loan.

If you have stable income, great credit, high monthly liabilities and no down payment:

Then an FHA loan is probably going to be your best bet with down payment assistance.

If you have stable income bad credit, high monthly liabilities and no down payment:

Then an FHA loan would be the most suitable if your credit score is 640 or higher. If not, going with a traditional FHA loan with gifted funds for a down payment would be optimal.

If you have a previous derogatory credit event in your past under the most recent last seven years:

Then and FHA, VA or USDA loan would make the most financial sense as conventional loans or have a seven-year window on foreclosures and four year waiting window on chapter 7 bankruptcies.

Alternatively, your situation might not be described above. Perhaps it might mean having to get a co-signer, paying off debt or putting less money down on a home to pay off some liabilities to improve your borrowing power.

97 percent of all residential loans in the market today are government backed loans or government insured loans. Hopefully based on the information that you’ve learned you can now start to get a read on what mortgage loan program would be most suitable for you and your family so you can decide if that mortgage loan you’re looking at makes financial sense.

 

Scott Sheldon is a local mortgage lender, with a decade of experience helping consumers purchase and refinance primary homes second homes and investment properties. Learn more at www.sonomacountymortgages.com.