Are you looking to purchase a home but need help determining what kind of loan is right for you? There are several different types of loans available to homebuyers, each with its own set of benefits and drawbacks.
In this blog post, we will discuss the different types of loans so you can decide which one is best for your situation. We’ll also provide tips on what to do if you’re not approved for the loan you want and how to prepare your finances for the home-buying process.
The Different Types of Mortgage Loans Available
There is no ‘right’ answer to the question, “Which type of home loan is best?” In fact, the best answer is, “it depends.” No two home buyers are alike, so it’s up to you and your loan adviser to choose the mortgage program that works best for you.
Today’s buyers are fortunate to have access to a wide variety of loan options. Each home loan program has unique benefits that cater to a particular type of buyer. Your goal should be to find the one that matches your ‘wants’ and your’ needs.’
These are the most common mortgage loan options:
- VA: zero-down option, issued by private lenders and partially backed, or guaranteed, by the Department of Veterans Affairs (VA)
- FHA: insured by the government, issued by a bank or other lender that the agency approves
- Conventional: not insured or guaranteed by the government
- USDA: made or guaranteed by the United States Department of Agriculture’s Rural Housing Service agency to help households with very low to moderate incomes purchase safe and affordable homes in rural areas
- THDA: a 30-year fixed-interest rate loan focusing on first-time homebuyers, U.S. military veterans, and homebuyers in targeted areas, helping low-income individuals and families obtain affordable home loans
- Rural Housing: allows buyers to buy, build, and/or improve a permanent residence in eligible rural areas
- Doctor Loans: a loan that is only available to qualifying medical professionals
There are restrictions and qualifications for all these loan options. Your lender will help you narrow down your options based on these restrictions and qualifications so that you get the best loan for your situation.
What to Do If You’re Not Approved & Ways to Boost Your Chances of Being Approved
First thing is first, do not give up! While it is certainly disappointing to be denied a home loan, it is essential to remember that this is not the end of your homebuying journey. You can do several things to increase your chances of being approved for a loan in the future.
First, take a close look at your credit report and score. Then, if there are any errors, dispute them with the credit bureau.
Second, try to pay down your debt as much as possible. This will improve your debt-to-income ratio, which is one of the critical factors lenders look at when considering a loan application.
Finally, consider saving up for a larger down payment. A larger down payment will not only reduce the amount you need to borrow, but it will also show lenders that you’re serious about owning a home.
By taking these steps, you can increase your chances of being approved for a home loan in the future.
The Closing process & What to Expect
The closing process is the final step in buying a home. During this process, all of the paperwork will be finalized, and the purchase price will be paid.
The closing process typically occurs at a title company or attorney’s office, which can take anywhere from a few hours to a few days. The buyer and seller will sign a sales contract, as well as various other documents related to the property. The buyer will also need to provide proof of insurance and arrange for any necessary inspections.
Once everything has been signed, and the purchase price has been paid, the new homeowner will receive the keys to the property.
There is no ‘best’ type of home loan. The best loan for you will depend on your unique situation. Be sure to work with a lender who can help you find the best loan for your needs.
If you are not approved for a home loan, do not despair. You can take steps to improve your chances of being approved in the future.
And finally, remember that the closing process is the final step in buying a home. Be sure to have all your paperwork in order and be prepared for any inspections that may need to be done. Once everything is finalized, you’ll be the proud owner of your new home!
If you are looking for a home in the Greater Nashville area, trust The DeSelms Team to help you find the perfect one. We know this market and how to find the right home for you. So contact us today, and let us help you find your dream home!
