What type of loan do you recommend for a new family moving to the Valley?

“What type of loan do you recommend for a new family moving to the Valley?”

If someone is new to home buying and this is their first purchase, there are two types of loans that would be advantageous to the buyer.

The FHA, which stands for Federal Housing Administration, is a HUD guaranteed loan and it’s only a 3.5 percent down payment.

If you’re a veteran and have VA eligibility, which stands for Veterans Administration, you can get a special benefit loan with a zero percent down payment. This loan is only available to veterans.

If you don’t have a lot of cash to get into a new home, you’re going to want to explore one of those two types of loans.

But if you have a larger down payment saved up, you can do a conventional loan, which requires at least a 5 percent down payment. The mortgage insurance with a conventional loan is reduced at 10 percent and again at 15 percent down and is not required for loans with 20 percent down payment.

Conventional will give you a little better edge in bidding war than with a FHA or VA loan.

So if you have the down payment, I recommend a conventional loan.

If you are just starting out and don’t have a lot of cash to spend, try either the FHA or VA loan.

Also with VA and FHA, there are some closing costs involved. Keep in mind; it can be also be a gift from a relative. If you don’t have money for a down payment, but you have a relative that wants to help you out, they can gift all of your proceeds to close with FHA.

This is such important information to first time home buyers. Check back with Walters Realty Group for more answers to your real estate questions. Submit your question for Charlie on the Walters Realty Group Facebook or Twitter page!

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