We work with all types of financing programs, including First Time Buyer, VA, FHA, and Conventional. In fact, Cynthia was the one who is responsible for getting the FHA loan limits raised in Kent County in past years.
Financing Your Home
One of the most important decisions you will need to make is what type of mortgage is best for you. Many purchasers obtain a pre-approval for a mortgage before they decide to look for a home. Not only does this pre-approval determine the amount of mortgage you qualify for, it also determines what is the best type of mortgage for you and the amount of funds you will need to invest to purchase your home.
There are hundreds of mortgage companies as well as hundreds of mortgage programs. A few of the most appealing types are detailed below.
Veterans Administration loans are available for those who have served in the Armed Forces. You may use your VA loan entitlement more than one time as long as your previous entitlement has been cleared. VA loans account for about 25% of our market in Kent County. Mortgage companies can normally process the loan very quickly. We have worked with many veterans who have purchased using the VA loan. Call us for easy pre-qualifying to see how much home you can afford, or we can have you pre-approved for a VA loan by a direct endorsement mortgage lender.
Many purchasers who are not veterans use the FHA loan program because it is one of the programs that require the least cash down. FHA loans are based upon income and qualifying, not whether you have ever purchased a home before. Many first- time buyers use the FHA program. The seller may assist with payment of some of the purchasers' closing costs. FHA qualifying guidelines allow 29% of total monthly income to go toward the proposed mortgage payment and 41% to total payments including the proposed mortgage payment.
Conventional financing accounts for the majority of financing types used in our marketplace. There is an abundance of programs with some requiring as little as 3% down. Typically some of the programs require 5% or more down. Private mortgage insurance (PMI) is required with less than 20% down unless you are using a program like the 80-10-10. Call us for specifics!
This is a type of conventional loan that allows the borrower to obtain a first mortgage for 100% of the value of the home with a small origination fee being added to the mortgage amount. This program allows the purchaser to avoid paying private mortgage insurance and thereby have a total payment less than a standard FHA loan. Most lenders now offer this program. There are certain restriction in regard to family income and location of the house: the program cannot be used in Dover and other densely populated areas.
Adjustable Rate Mortgages
This type of conventional loan allows the borrower to start out at a lower rate. The loan adjusts usually at a set term either up or down, depending on what the market does. Some adjustable loans automatically adjust annually. These loans usually have a cap on the interest rate as to how high it can adjust. Not used much when interest rates are reasonable, this type loan was good when interest rates were high.
There are many other types and variations on mortgages. Finding the right one that fits your needs is usually as important as finding the right home. Plan to become pre-qualified before you start house hunting. This will give you a good idea of the total investment you will need to make when buying a home and a good idea of closing costs.
Many special programs are available for first time buyers through the Delaware State Housing Authority/ State Bond Program. This program is designed to assist the first time buyer obtain their first home by making a second mortgage to cover closing costs. There are income limits and other criteria on the maximum value of the home that can be purchased. The City of Dover also offers First Start financing to assist lower-income buyers purchase a home within Dover City limits.
Please give us a call or contact us using our online feedback form for more information about your financing options.