What Is A Home Loan
A home loan is a specific dollar amount that you borrow from a financial institution to get a house. Your mortgage is a legal document that states your agreement to pay a particular amount every month for a certain amount of time. A home loan will have either a fixed or adjustable rate, which will directly affect your mortgage.
At DC Lending LLC, our team of loan officers is here to help you get the home loan that benefits you and best suits your financial situation. We are a local mortgage company in Vancouver, WA, that strives to provide a smooth and hassle-free process when acquiring home loans.
Types Of Home Loans
There are many types of home loans, and each will be better suited for certain financial situations. The five essential loans include Conventional, FHA, VA, USDA, and non-conforming loans. Our loan officers are experienced in all kinds of loans and are fully equipped to help you find the perfect loan for you!
This type of loan gets its name by conforming to the rules and guidelines of Fannie Mae, which is an agency sponsored by the government and ensures conforming loans. This process protects the lenders and is why the requirements are more strict. Some of the factors that determine eligibility for a conforming loan include first-time homebuyer, size of down payment, debt-to-income ratio, credit score and history, and appropriate documentation. Conforming loans are an excellent choice for people with high credit scores.
This loan can also offer a down payment as low as 3%, but the borrower must have private mortgage insurance (PMI) if the down payment is less than 20%. Conforming loans are also only available for loans that are equal to or less than the conforming loan limit. The Federal Housing Finance Agency sets this limit, and it is adjusted every year for Fannie Mae to estimate the average U.S home price. For the year 2019, the conforming loan limit is $484,350.
These types of loans do not fall under the guidelines and limitations set by Fannie Mae, and therefore can not be considered conforming loans. Reasons for this include insufficient credit, exceeding the loan-limit when purchasing higher-end real estate, or other requirements that are not met to qualify for a conforming loan. For this reason, these types of loans usually come with a higher interest rate to compensate for the risk to the lender.
The U.S government backs these loans and offer low-interest rates, flexible repayment plans, and other possible benefits. But because of this, government loans have stricter guidelines similar to conforming mortgages. FHA loans, VA loans, and USDA loans are all considered government loans.
FHA loans are designed for low to moderate incomes and require lower down payments and credit scores, which makes them a popular choice for first-time homebuyers. VA loans offer a 0% down payment for veterans, service members, and select military spouses. USDA loans also offer a 0% down payment for rural homebuyers.
Conventional loans are more credit sensitive and, therefore, have stricter requirements to balance out the risk to the lender. These loans can be beneficial for people with higher credit scores and a lower DTI (debt-to-income ratio). A larger down payment (20%+) will allow the borrower to avoid PMI.
Local Home Loan Experts
Our team of loan officers at DC Lending LLC is experienced and educated in working with all kinds of loans and financial situations. Our goal is to help every one of our customers get an affordable loan that allows them to buy the home of their dreams. Buying a home can be a very nerve-wracking experience. This is why our family-owned business strives to make the process as stress-free and smooth as possible. Stop by our office and meet our team to see why Vancouver WA residents choose to work with DC Lending LLC.