Financing Your Home
Once you have decided you want to purchase a home you will need
to investigate your financing options. You will have a down payment,
closing costs and other costs of purchasing your new home.
Down Payment. Your lender will typically insist you put
down an amount ranging from 0 to 20 percent as your down payment.
This will depend on the type of loan you choose.
VA Loans. They require no down payment. Veterans who served
active duty during World War II and later periods are eligible
for VA loan benefits. Veterans and officers with service begining
after 1980 must have served at least 2 years. Members of the Selected
Reserve, including the National Guard who are not otherwise eligible
and who have completed 6 years of service and are still serving
may be eligible. This expanded eligibility will expire October
28, 1999. Contact your local VA office for further information.
FHA Loans. This is a loan from the Federal Housing Administration.
It allows for a smaller down payment. A typical down payment could
be as low as three percent. With this type of loan, your down payment,
closing costs, and pre-paid fees can be paid entirely with gift
money.
Conventional Loans. These are the most popular loans and
are usually for those people with very good credit. They are not
insured or guaranteed by the government so they have stricter lending
requirements. In some cases a larger down payment may be required,
anywhere from 5% to 20% of the purchase price. Most of the money
must come from your pocket, not from a gift.
First Time Home Buyers-Special Loan Programs. Some communities
offer local grants and community assistance programs. The U.S.
Department of Agriculture also offers a Rural Development loan.
Most of these programs are available not only for the first time
homebuyers but also for anyone who hasn't owned a home in at least
three years.
There are many new programs available. It would be worth your
time and effort to discuss your options with your realtor or loan
officer.
The above information should be understood to be a general
discussion of the subject matter and DOES NOT constitute
a legal opinion about the situation. For further information
please consult a qualified attorney.
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