Which Mortgage Loan Is Right for You?

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Which Mortgage Loan Is Right for You?

Product Choices

There are several loan products out there, but how do you decide which product is best for your situation?  Just because an FHA loan might be best for applicant A, doesn’t mean that it’s best for applicant B.  Each person’s financial situation is different.  Asking your mortgage loan officer for guidance is a good way to compare loan scenarios to find out which loan product is best for you.  Below are some quick facts about loan products that Alliance Bank has to offer:

Secondary Market Loans

Conventional – this has probably been the most popular loan type lately due to the simplicity of the process, turnaround time, competitive interest rates, and closing costs.  Features and requirements include a minimum 620 credit score, fixed interest rate for the life of the loan, and as little as 3% down for first-time home buyers; otherwise, it’s as little as 5% down.  Total debt-to-income ratio requirement is 50% or less.

USDA – this is an excellent product for first-time home buyers that meet the mold.  Features and requirements include as little as 0% down, minimum 640 credit score, a minimum of 3 tradelines with a history of 12 months or greater, considered rural property by USDA, USDA income limitations, and is secured by the government.  Debt-to-income ratio requirements are 29% or less for the housing expense ratio and 41% or less for the total debt ratio.

FHA - this used to be a popular product a few years ago before the Conventional loan product becaume so compettiive regarding down payment, interest rates, and closing costs. Features and requirements include a minimum 620 credit score, as little as 3.5% down for all qualified applicants, and is secured by the government. Private Mortgage Insurance used to be required for the life of the loan; however, now it falls off when your loan reached below 80%.

VA – available for qualified Veterans. Requirements and benefits are minimum 600 credit score, 0% down, highly competitive interest rates.  Benefits may vary per individual veteran.

In House and Land/Lot Loans

Requirements vary per loan purpose, but the primary requirements include credit and payment history that reflect creditworthiness.  This product may be for land, unique situations and/or properties, and debt-to-income ratio requirement is 41% or less.  Closing costs tend to be less than that of the Secondary Market loans.  Some of these loans may be fixed or Adjustable Rate Mortgages (ARM).  Though ARM loans may sound negative, it is a route that might be best if your plans are to occupy the property for a short period of time, as most have a fixed rate for a set period of time. 

Home equity, home improvement, and refinance mortgage loans are also available. Contact the mortgage department at Alliance Bank for more information at 903-885-2187.

Definitions

  • Debt to Income Ratio – monthly debts divided by gross monthly income.
  • Housing Expense Ratio – monthly housing PITI divided by gross monthly income (PITI – principal, interest, taxes and insurance).
  • Private Mortgage Insurance (PMI) – insurance required when a borrower puts less than 20% down upfront. The purpose is to protect the lender/investor if one defaults on his or her mortgage.
  • ARMs – Adjustable Rate Mortgages.

Member FDIC. Equal Housing Lender.