Buying a home is a very big decision and lenders made it possible for many people to own a home who are not able to afford it otherwise. They will be paying off the loan in thousands, for many decades. Most of the people apply for loans to buy a home and some of them do not qualify for a mortgage because many aspects are involved in it. You may need to provide a lot of documents and credentials to prove that you will be paying off loan before they allow you to qualify.
You must start searching about home loan long before you talk with a realtor. In last ten to twenty years, consumers were limited to banks only for home loans. But now market is offering you large list of refreshing alternative home loan options. Banks have limited mortgage offers for their homebuyers as compared to other lending companies.
With the choice of alternative options, homebuyers are able to connect with lenders anywhere, explore various loan structures and even have their own mind in application process.
An alternative lender may offer you loan options which you find beneficial for your home buying plans. Many lenders offer you unique loan terms, rapid application process, fastest approval and many others which you may not get from banks. The lenders and brokers can help in finding best mortgage loan and moving the process in right direction.
While looking for mortgage, you will come to know about two categories of lenders. One of them is direct lenders, who are actual providers to help you get home loans. The traditional banks, credit card companies and online lending companies fall in this category.
The second one is a kind of middleman, who is link between the professional lenders and home buyers connecting both sides. Brokers and lending marketplace are the example in this category.
For many homebuyers, it is difficult to get approval for traditional mortgage, which comes with fixed interest rates, twenty percent for down payment and eighty percent for the mortgage, having term of 20 to 30 years. But there are other lending options, non-traditional, offering better choices for you compare to others, depending on your situation.
The alternative options for lending are:
US department of Agriculture have created a plan to help, for low to moderate income families living in rural areas, providing loans for 100% financing mortgage. They offer zero down payment and low on mortgage insurance premium (MIP) payments. The (MIP) rates are usually built right into their monthly payments.
VA loans are particularly for veterans and excellent choice for homebuyers, can save thousands in mortgage in insurance and with zero percent down, it is the cheapest offer in market. Some lenders may require 620 credit score but accept lower too. The VA funding fee may be exempted for veterans and families.
FHA loan is provided by the Federal Housing Association, for borrowers with credit score 580 or above can qualify. Buyers only have to put a 3.5 down payment instead of 20%. Closing cost may be covered by FHA.
You can use someone from your family or friends as co-signer on your mortgage for you. If you fail to pay the lender can come after co-signer to pay loan on your behalf.