Loan Options for Home Buyers Today
While the economic situation has tightened consumer lending, today's homebuyers still have plenty of options for financing. A knowledgeable Realtor in Rochester MN can help buyers navigate the complex paperwork and legal requirements to secure optimal financing. The loan options below will help qualified buyers move into one of the fantastic Rochester Minnesota homes for sale.
One of the most popular financing options in Olmstead County is a fixed term/fixed rate loan. Fixed loans spread consistent principal and interest payments over the life of the loan, which typically lasts 15 or 30 years. The interest rate is locked in at closing and cannot change unless the loan is refinanced. Buyers never have to worry about fluctuating payments.
As an alternative, buyers who need a smaller initial payment should investigate adjustable rate home loans. The best candidates for these loans are people who plan to live in the home for only a few years, plan to refinance for better terms or a fixed payment, or plan to increase their incomes within a short time period. Like fixed loans, adjustable loans have a fixed repayment term, such as 5, 7, or 10 years. Unlike the fixed options, however, the interest rate on adjustable loans can change. The loan begins with one interest rate for the initial rate period, usually one year. After that period, the rate can increase or decrease and will be locked in for an additional, predetermined timeframe. The rate changes and locks continue for the duration of the loan, which means that payments can change periodically.
Jumbo loans are fixed or adjustable loans that are larger than the Freddie Mac and Fannie Mac lending limits. For 2011, loans up to $417,000 are considered conforming, while larger Rochester Minnesota homes for sale must be financed as jumbo loans. These loans have higher interest rates than traditional loans because the lenders take on a greater level of risk. The high rates and considerable loan balance can equate to hefty mortgage payments.
First-time homebuyers who have saved less than 20% for a down payment may prefer Federal Housing Authority loans. These loans are guaranteed by the federal government, have more lenient underwriting requirements than regular financing, and require down payments as low as 3 - 5%. At the same time, they do require a monthly mortgage insurance payment until the home's equity reaches 20%. An experienced Realtor in Rochester MN can help buyers determine whether FHA loans may be right for them.
Veterans, active duty military personnel, and surviving spouses may also be able to secure financing through the VA loan program. Loans secured by the Department of Veterans Affairs have no down payment obligations, no mortgage insurance fees, and low interest rates.
By working with a Realtor in Rochester MN, Olmstead County homebuyers are assured professional advice and connections with a variety of financing professionals. Realtors are trained to assist during the home search, through offers, and even after closing. When buying one of the Rochester Minnesota homes for sale, clients should feel comfortable asking a Realtor about property valuations, inspections, suggestions for a profitable future sale, and anything else that could convert the new purchase into a true home.
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Find a professional Realtor in Rochester MN that can help you search the MLS, obtain a home loan, or help find quality Rochester Minnesota homes for sale.
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