WHAT ARE MY MORTGAGE OPTIONS
CONVENTIONAL: These loans can be a fixed rate or an adjustable, meets guidelines set by Fannie Mae and
Freddie Mac and is secured by investors. Conventional loans are not insured by the Federal Housing Administration (FHA) nor are they guaranteed by the Veterans Administration (VA).
FHA Loans: These are loans which are insured by the US Dept. of Housing & Urban development. They are designed to make purchasing a house more affordable by having low closing costs and low down payments. They offer fixed and adjustable rates. You must deal with a FHA approved lender. To find a lender you can check go to http://www.hud.gov/ll/code/llslcrit.cfm, fill in the information requested and you will be provided with a list of lenders who are FHA approved. Just fill in the State, the zip code, leave everything else and hit search. It will bring you up a list of approved lenders with their contact information.
FHA Loan 203(b): Frequently used; loans for 1-4 family homes including manufactured houses;
FHA Loan 234(c): This type of FHA loan is for the purchase of a unit in a condominium project. These Condo project, however, must be approved by HUD in order to qualify for a FHA 234(c) loan;
FHA 203(K): This loan is used when purchasing a home in need for rehabilitation. The way this works is the lender pays off the existing loan and the balance goes into and escrow account and is released as the repairs are done. The repairs must be within the HUD’s minimum property standard and all local codes and ordinances.
VA Loans: A VA Loan is made by private lenders such as banks, savings and loan companies and mortgage companies. You need to be eligible for a VA loan. To check on eligibility details go to: http://www.benefits.va.gov/homeloans/. Once you determine if you are eligible then you need to get your Eligibility Certificate. You will need this certificate to present to the VA approved lender. Go to: http://www.benefits.va.gov/homeloans/eligibility.asp This site will tell you what you need for proof that your are eligible for a VA Loan and will take you through the steps of getting your EC. Once you have provided your mortgage broker with your EC, they will be able to begin your loan process. If you have already found the home you wish to purchase your lender will request an appraisal of the property. You should schedule a home inspection to be sure there are no major issues with the home. You are now on your way!
RHS Loans: USDA Rural Housing Service offer several programs to aid low to moderate income rural residents to purchase, build, repair or relocate a home. RHA has minimal closings costs and no down payment for qualified buyers. Go to: www.rurdev.usda.gov/recd_map.html for agencies and details on RHS Loans.
What if my parent’s can help me with my home purchase?
Great... Just don’t forget about your tax responsibility. In 2012 an individual can gift up to $13,000 tax free in one year without paying gift tax. Married couples can give up to $26,000 per year.
If they want to act as a lender, and let you borrow money to purchase the home, they can they just need to charge interest on the amount they loan you. The interest rate must be based on the IRS “Applicable Federal Rate”, which would still be substantially lower than the low mortgage rates we are currently seeing. The parents would also have to pay tax on the interest earned on the loan and you, the child, would be able to deduct interest you paid on that loan on your taxes.