One of the many decisions you need to make when buying a house in Roseburg OR is which mortgage is right for you. Should you go Conventional, FHA, USDA, or VA?
With so many choices and acronyms, getting a mortgage is a big… and sometimes overwhelming decision. So how do you know which loan or which mortgage is right for your situation? Before getting too crazy about looking at homes, and definitely before making any offers, it just makes sense to educate yourself about the different mortgage loans and ask questions.
In this video, I break down and compare the 4 common loan products that you’ll be looking at when buying a house in Roseburg OR.
Which Mortgage Is Right?
It’s important to understand that, depending on your credit score, your credit history, your debt-to-income ratio, and your time on the job might determine if you qualify for one or more of these mortgage loan programs. It is also important when deciding which mortgage is right for you to have a basic knowledge of the different specifics, allowances, and requirements of each.
- Maximum Loan Amount
- Minimum Down Payment & Mortgage Insurance (PMI)?
- Loan Repayment Term
- Minimum Credit Score Required To Qualify
- Gift Funds Allowed?
- First Time Homebuyer Program?
- Seller Contributions To Buyer’s Closing Costs Allowed?
Qualifying Factors Of Mortgage Loans…
One thing you want to look at when deciding which mortgage is right and best for you is knowing the qualifying factors for each. Important stuff to ask your lender or agent when you’re buying a house? You might assume that one loan would be best… but until you look at the benefits and qualification requirements, and talk to your mortgage lender, you probably won’t really know.
Here are some things your lender will look at in order to qualify you for a mortgage.
- Credit History
- Credit Score
- Debt-To-Income Ratio
- Time On the Job
You should know that depending on your credit history, your credit score, debt-to-income ratio, time on the job, and things like that might determine whether you qualify for one or more of the loan options that I’m talking about today. I also have a sheet that I can send to you. Just shoot me a text or call 541-643-1131 or contact me here.
Mortgage Loan Limits And Requirements In Oregon
So, looking at Conventional, FHA, USDA, or VA (for qualified veterans)… which is right for you? A good place to start is by knowing the different loan limits for each mortgage. For instance, Conventional and USDA mortgage loans both have maximum loan amounts of $647,200 (currently). FHA also has maximum loan amounts, but it varies by the county that you live in. Got questions?
The maximum loan amount for VA mortgage loans is unlimited, so literally, if you can afford it (debt/income ratio) you can buy it. The down payment required for each of these loans is also different, VA and USDA, as low as ZERO down! Conventional mortgages have down payments as low as 3%, FHA loans are typically 3.5% down. SEARCH FOR HOMES
But don’t I need 20% down to buy a house? No, you do not. It is bad information, and even though the advice might be well-meaning, it is false information. You can buy a home with very little or a low down payment, depending on your situation, needs, and qualifications. There is, however, something you should be aware of…
If you put less than 20% down, you’ll have a mortgage insurance premium.
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So, yes, low down is possible, but you’ll want to ask your lender what the insurance premium will cost (except VA loans). It is usually worked into the estimated monthly payment they quote you when getting pre-approved for your mortgage loan. The reason you’ll pay mortgage insurance is based on risk.
A lower down payment means the bank will be assuming more of a risk of default. The mortgage insurance insures the lender in case you default on your loan. So, lower down means you’ll need to provide protection to the lender or they won’t approve you for the mortgage.
The Exception to the Mortgage Insurance Rule… VA mortgage loans do not require mortgage insurance. This is one thing I love about VA loans, so if you are a qualified and eligible Vet and you want to buy a house in the Roseburg OR area, we should talk. It’s an awesome program!
Loan Terms: Loan terms are pretty standard. Mortgage loans usually range from 15 to 30 years with all of these mortgage loans. However, USDA loans are only and always a 30-year amortized mortgage.
Borrower Credit Score Requirements For Mortgage In Oregon
You may believe… or have been told that you need to have perfect, spotless credit in order to qualify for a mortgage loan and you really don’t. In fact, I’ve helped a lot of buyers purchase a home over the years who didn’t think they could. The key is to have a legit and valid explanation of why you might have a ding or two on your credit report… and have established a new – good history of borrowing and paying on time.
Knowing your credit score is really important when choosing which mortgage is right for you when buying a house. Your lender can provide this at the prequalification meeting or you can jump on to Equifax to check your mid score. With this in mind, you should know the minimum credit score requirements for each of the mortgage options.
FHA and VA Mortgages require a min. 620 credit score while the USDA has a minimum credit score is 640. This means there are options for borrowers who wish to buy a house with marginal credit scores.
What Are Gift Funds And How Do They Work?
Maybe you’ve heard of gift funds, but what are gift funds, are they allowed, and how do they work? All of these programs allow gift funds so a family member can help you out if you’re coming up short on funds to buy a house. You’ll need to talk with your lender about how to structure gift funds if you need to have mom and dad gift you some money for mortgage costs.
If you’re thinking about buying a house in Roseburg but you’re finding yourself a little short of cash. Maybe you have enough for the down payment but not the down payment plus the lender fees and closing costs. This is where gift funds from a family member come in. You might also look at the option of a no-lender fee ZeroPlus Mortgage through Keller Mortgage.
Gift Funds or ZeroPlus: All four of these loan options allow for gift funds. That means you can have a family member like mom or Uncle Joe gifts you the money you need. You will want to talk to your real estate agent or lender about how to structure this
As I mentioned, if gift funds are not a possibility and the seller won’t pay your closing costs… and you’re still short on money, you might look at the ZeroPlus Mortgage through Keller Mortgage. It saved me over $4500 personally a few years ago.
ZeroPlus means that they don’t charge traditional lender fees, like an Origination Fee, Processing Fee, Underwriting Fee, etc. And for loans over $150,000, they give you an additional $1,000 to pay third-party fees like inspections or appraisals.
So, if you’re in this position and you can get gift funds, great! If not, deciding which mortgage is right for you might be answered with ZeroPlus. See if you qualify right from my app – download it here.
First-Time Homebuyer Programs And Grants
We see first-time homebuyer programs, incentives, and grants come and go, but at the moment, only Conventional mortgage loans technically have a loan specifically called a “first-time home buyer program.” Other programs are available for first-time home buyers, such as the Oregon Bond Loan Program and others.
- Conventional 97 Mortgage – A Fannie Mae program.
- HomeReady Mortgage – A Fannie Mae program.
- Home Possible Mortgage – A Freddie Mac program.
- HomeOne Mortgage – A Freddie Mac mortgage.
You’ll want to ask your lender about the different programs that might be currently available. Although they are not labeled “first-time home buyer programs,” the lower down payment of FHA or the no down of USDA is often times used by first-time home buyers because they might fit the budget better.
Again, talk with your lender also about these points and call/text me if you need a lender referral. 541-643-1131.
Mortgage Closing Costs In Roseburg Oregon
Mortgage closing costs and prepaid items “usually” average about 3% of the loan amount. Some buyers will ask a seller to credit them (or pay) for a certain dollar amount or a certain percentage of the closing costs at the close of escrow… instead of negotiating the price as much… so maybe a tad higher purchase price and a little more seller credit where you need it.
Coming off the booming real estate market of the past several years, we haven’t really seen much in the way of seller concessions. But, in a normal market, it is a common thing for buyers to ask for. But remember, you are asking the seller, it is not a given and should not be expected or demanded.
Some of the mortgage loan programs offer the seller to pay more… some less, but all of these mortgage programs allow for a seller credit to pay most of the buyer’s closing cost. Ask your lender how much you can request from the seller as it’s based on the type of loan and down payment amount.
USDA and FHA typically allow the seller to contribute up to 6% of the purchase price towards the buyer’s closing costs and prepaid items while a conventional mortgage loan will allow up to 9% of the purchase price to be credited to pay the buyer’s loan costs and prepaid items. The VA says the seller may contribute up to 4% of the sale price, plus reasonable and customary loan costs on VA home loans.
So, what that means is if you have the money for a down payment, or maybe you are VA and you don’t have a down payment… You don’t have a lot of money in the bank… They will allow the seller to pay most of your closing costs and get you into the house. Again, seller credits are usually in lieu of price negotiation. In other words, you offer a little higher price than you would have since you are asking for the concession.
So, if you’re thinking in the market and you’re unsure of which mortgage is right for you when buying a house in Roseburg OR… shoot me a text or give me a call. I’d be happy to get you pointed in the right direction. 541-643-1131.
Your Next Move – Buying A House
If you’re thinking about buying a house in Roseburg OR and you’re deciding which mortgage is right for you and you still have questions or you just don’t know where to start, the best thing that you can do is pick up the phone and give me a call. You can reach me direct at 541-643-1131, or shoot me a direct message. I’m always here to help.