When you are trying to choose a mortgage, you will discover quickly that there is not just one option. Many homebuyers qualify for multiple types of home loans. How do you narrow it down and figure out which of those options is suitable for your financial needs and goals?
In this post, we will walk you through some steps you can take to determine which loan types may be ideal. If you need help during this process, that is what we are here for. You can schedule a consultation to have one of our loan experts sit down with you to walk through your scenario and help you choose a mortgage product.
- Figure out if you qualify for a government-backed loan. A great place to start is to try and figure out whether you qualify for a government-backed mortgage such as an FHA loan, USDA loan, or VA loan. All of these types of mortgages offer easy qualifications and competitive interest rates, even without ideal credit. Some of them also offer additional benefits, like zero down and no PMI for VA loans. Both first-time and repeat homebuyers can qualify for FHA mortgages. To qualify for a VA loan, you must be a veteran, active-duty service member, or eligible surviving spouse. To be eligible for a USDA loan, you must fit within the income threshold and be purchasing a home in a rural zone (thankfully, there are a lot of those in Ohio).
- Consider your credit score, debt-to-income (DTI) ratio and income. When you apply for a home loan, your credit score, debt-to-income ratio, and income will all be assessed to determine what you qualify for. How competitive your qualifications are may have an impact on what type of home loan makes sense for you. For example, a borrower with a low credit score might find an FHA mortgage to be a suitable choice. But another borrower with a high score may choose a conventional loan in order to avoid paying for mortgage insurance, while still qualifying for a competitive rate.
- Assess whether you need a specialized mortgage product. Some scenarios may require a different type of mortgage product. Say you are investing in Ohio real estate as a foreign national. In that case, for example, you would need to apply for a foreign national loan.
- Figure out how much money you can put down. The amount you intend to put down on a home can have a significant impact on your choice of mortgage. Imagine you can afford to put down 20%, and that is your intention. You may be doing this because you do not want to pay for mortgage insurance. In that case, a conventional loan would make more sense than an FHA loan. On the other hand, let’s say you are not sure you can afford to put money down on a home at all. In a situation like that, a VA loan or a USDA loan would be a better option, if you qualify for one. In fact, if a USDA loan is your only zero down option, that might even inform your home search, since you would need to shop for a home in a rural zone.
- Think about how the features of different types of mortgages will impact your monthly finances. Ultimately, your goal is to find a flexible loan product that will fit within your budget every month. Along with the loan term, you need to consider how the interest rate for a given type of mortgage as well as whether or not it carries an insurance requirement will impact your monthly payments.
Buy a Home or Refinance in Ohio
Trying to figure out what type of mortgage is ideal for you on your own can be a challenge. But you are not on your own, with the friendly mortgage experts from ICM Mortgage on your side.
If you are ready to buy a home or refinance, please give us a call today at (740) 624-8091 to schedule your mortgage consultation. We can help you find a suitable mortgage in Zanesville or anywhere in Ohio.
