Jun. 19, 2018
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What type of loan should you choose?

Are you a first-time homebuyer? A first-time homebuyer is defined as an individual who has not owned a home in the past three years. You could be a “Baby-Boomer” and actually be a first-time homebuyer if you sold your home and have been renting for the past three years.

Wells Fargo Home Mortgage recently conducted a seminar for area real estate agents which I attended. In the packet I received was a detailed list matching loan type with buyer benefits. I would like to share this list with you so you can match a loan to your specific needs and make homeownership a reality.

Loan Type and Benefits

Fixed-rate mortgage. For the life of the loan the interest rate will stay the same. This loan offers those of you who plan to stay in your home for a longer period of time predictable monthly principal and interest payments and security against rising interest rates.

ARM- Adjustable-Rate Mortgage. Your interest rate may increase or decrease on pre-determined dates to reflect the current market. This loan will offer you a lower interest rate than a fixed rate loan. The initial interest rate can be locked in for an introductory period of time but will than will typically adjust every year. This loan is usually chosen by the buyer who will sell or refinance their home within a few years or anticipates being able to pay a larger mortgage payment in the future when the interest rate of this loan increases.

FHA Loan. A low 3.5% minimum down payment is required. You can use gift funds from another source for your down payment and/or closing cost. When you sell your home the financing can be assumed by qualified buyers. This loan is ideal for the homebuyer who has limited funds for a down payment.

VA Loan. A very low or no down payment is required. A variety of rate, term, and cost options are available. This loan offers flexible loan qualifying guidelines. Gift funds can be used for closing costs. The financing of this type of loan can be assumed by veteran and non-veteran buyers when you sell your home. This loan is only available to those of you who are active-duty or veteran military service members.

This is an outline of the basic loan types and benefits of each loan. If you are thinking of purchasing a home this spring or summer than your first step is to contact a local real estate agent. Your real estate agent will then have the knowledge and experience to recommend to you three qualified and reputable loan officers. After you interview each over the phone you will want to meet with the loan officer in person you will work with in securing your loan. Yes, I said in person! By meeting with this mortgage representative and discussing your finances, and your homeownership goals your loan officer will be able to advise you on the type of loan that meets your goals.

By taking the time to meet with your mortgage representative they will be able to review with you the current government, 1st Time Homebuyer and Jumbo loans and guidelines available to you in the current market and in the specific county you will plan to purchase your home in.

When you have found the home that meets your needs your real estate agent will have your loan pre-approval in hand to show the seller that you are indeed qualified to buy their home. As a buyer with a pre-approval in hand you have the benefit during the negotiation process to secure the home you desire over a buyer that does not have a mortgage pre-approval presented with their Contract of Sale.

Madolyn Greve, ABR, CNE, CRS, GREEN, SRS, SRES, NJ Notary Public, is a REALTOR® and licensed real estate agent with Callaway Henderson Sotheby’s International Realty, 4 Nassau Street, Princeton, NJ 08542, Mercer County Board of REALTORS® 2015 Top Producer, recipient. Cell: 609-462-2505, Office: 609-921-1050, www.linkedin.com/in/MadolynGreve and madolyngreve@aol.com

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