When it comes to Tacoma home loans, borrowers have quite a few options to choose from.
There are many factors that will affect your financing decisions and the options that are made available to you. These will vary based on your current situation and should be discussed with a mortgage professional so you can be made aware of what options you have to work with.
This post will discuss the differences between two common mortgage loan options, the FHA home loan and the Conventional mortgage loan, and will hopefully provide you with some insight into the benefits offered by both options.
An FHA home loan is a mortgage that is insured by the Federal Housing Administration, meaning the borrower must meet both the FHA and the lender’s requirements to be approved. This insurance on the loan is designed to protect the lender should the borrower be unable or unwilling to make their mortgage payments.
A Conventional mortgage loan is a mortgage that may or may not be insured by the Federal Government, meaning there can be more flexibility with government regulations and approval requirements.
With an FHA loan, borrowers are allowed to put a small down payment, which can be as low as three and a half percent of the sale price. With FHA, you can qualify with less than perfect credit.
While smaller down payments may be seen as a benefit to some, there are some benefits that come along with larger down payments as well. Borrowers who put down at least 20% as a down payment on their Conventional loan can avoid paying for default insurance on their mortgage entirely.
FHA loans are usually more forgiving of past issues like bankruptcy or foreclosure and maintain less stringent guidelines for credit scores, making them much easier to get approved for than Conventional loans. This does not mean you will automatically be approved for an FHA loan just because it is typically easier to qualify for. You will still need to have your finances in order and be working to fix any credit issues you are currently dealing with.
Of course, each of these loan options come with a number of other benefits including refinance and transfer options with FHA loans and the ability to purchase investment or high dollar properties with conventional loans.
In the end, your final decision will come down to two things:
1. What you qualify for
2. Whether you want to pay more up front and less on insurance, or less up front and more on insurance
As mentioned before, when it comes to your Tacoma home loans options, there may be many options available to you and consulting with a professional is your best bet to ensuring that you get the right mortgage for your situation.