North Texas home buyers often wonder, how do I know which loan is just right for me. Are you fishing for the right loan?There are so many options, there is no lack of wonder, why first time buyers or move up buyers, have trouble finding the right program that fits their needs perfectly.
Should I go FHA or Conventional? What’s the difference between FHA and Conventional mortgages?
FHA is a government loan that allows for the least amount of down payment. In most cases, FHA mortgage rates are a little lower than conventional, but FHA also comes with a monthly mortgage insurance premium. FHA allows for a minimum down payment of 3.5% and allows the seller to pay 6% closing costs. Conventional lending will allow for a minimum down payment of 5%, and if you do not put down 20%, you pay a monthly Private Mortgage Insurance. If you are looking for the lowest payment and can’t put down 20%, FHA will in most cases provide you the lowest payment. If you can put down 5%, the higher payment option, is getting a 80% first conventional lien, and a 15% 2nd lien. Why would you choose the higher payment option? Typically, you can get the 2nd lien in a 15yr fixed, so you can fast forward the knocking down of principle in that second lien, if you are willing to go that route.