Discover How to Get An FHA or A Conventional Mortgage With An Existing Student Loan Debt: Get To Know More About These Options Currently Available For You

You’ve probably seen more than a few of the thousands of articles and news reports about how student loan debt is preventing people from buying homes. And, if you’re like one of the 65% of college graduates who have student loan debt, you could owe an average of $47,671, according to Nerd Wallet, which did a study of how much people owed in student loans in 2018. If you’ve attended graduate or professional school like med school or law school, you might owe $100,000 to $200,000 or more. More than 44 million people in the U.S. have student loan debt, and the total owed is more than $1.6 trillion, according to the Federal Reserve Board.

Those are the stats, but how can you buy a house with student loan debt?

First things first: pay close attention to your credit score. You have many options for free credit monitoring. You can usually get credit and ID theft monitoring services as benefits from good credit card companies.

Making all of your monthly payments on time contributes to a high credit score. Missing even one payment can have serious consequences for your FICO credit score. If you find an error, it’s worth your time to take action to remove it from your credit report.

Don’t take on additional debt if at all possible. For example, if you have credit cards, don’t use them unless absolutely necessary, and pay them off as soon as possible. Lenders like to see credit utilization less than 30%. If you can reduce the balances on any credit accounts other than your student loans to 10% or less, this will boost your credit score.

Second, look for assistance programs that might help you make a down payment on a house or offer you a low down payment requirement. FHA loans, VA loans, and in certain areas, even USDA loans can over low or zero down payment options.

You can also investigate options to consolidate your student loans and pay them off faster. The sooner you get your student loan payments under control or paid off, the sooner you will be able to seriously start looking for a house and becoming a home owner. A qualified mortgage professional will be glad to work with you on qualifying for a California home mortgage and home ownership.

Sources

https://www.forbes.com/sites/zackfriedman/2018/07/18/student-loans-mortgage-home/#31c6a5775752

https://www.nerdwallet.com/blog/loans/student-loans/student-loan-debt/

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Wanting To Know More About The Current Advantages Of An FHA And A Conventional Mortgage And To Tell Their Differences? California Platinum Loans Will Tell You More

Both FHA mortgages and conventional (non-FHA) mortgages have advantages and disadvantages. Contrary to some reports, you can find a conventional mortgage with a down payment lower than 20%, so you may be able to make a low down payment for an FHA mortgage or a conventional mortgage.

However, each mortgage loan program has advantages, so which are the strengths offered by FHA home loans, and which are the strengths offered by conventional mortgages?

What are some of the advantages of FHA home mortgages?

First, if you’ve got less than perfect credit, an FHA home loan could be your best option. Technically, FHA home mortgages are offered to people with credit scores as low as 500. In practice, most FHA home loans are offered to people with scores higher than 580. You will need a credit score of at least 580 to qualify for a 3.5% low down payment on an FHA home loan. With a score lower than 580, you will need to put at least 10% down.

FHA home mortgages are often touted by mortgage experts as the only alternative for home buyers with poor credit. They offer competitive mortgage interest rates. However, FHA home mortgages always come with a one-time mortgage interest charge when the loan closes. You will also pay monthly mortgage interest (MI) payments for an FHA mortgage, potentially for the entire life of the loan.

What are some of the advantages of conventional home mortgages?

One of the biggest differences between a conventional home loan and an FHA home mortgage is the mortgage insurance requirement. Not all conventional mortgages require mortgage interest. None of them charge a one-time mortgage interest payment the way FHA mortgages do.

Conventional home loans can offer more flexible terms. The biggest difference between conventional home loans and FHA home mortgages are the credit scores that are generally required to qualify. Few, to no, conventional home loans are available for borrowers with credit scores lower than 620. The higher your credit score, the more flexibility in underwriting and interest rates and terms you will find for conventional home mortgages.

If you have a good credit score and are able to pay a bit more of a down payment than 3.5%, you may qualify for a 30-year fixed rate or a 15-year fixed rate home loan through an FHA home mortgage or a conventional home mortgage program.

Sources

https://themortgagereports.com/17168/fha-conventional-97-low-downpayment-comparison

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Discover The Meaning of Real Estate Secret Words For Instance: Fannie Mae, Freddie, Conforming Loans And So On Today

If you’re looking for a new home to buy or investigating home mortgage loan choices, you’ve probably run into some friendly, upbeat people who want to help you achieve your home ownership dreams or maximize the value of your home buying potential. However, some of these people sure talk funny! The real estate industry does have its own lingo. Just like any industry, sometimes the pros forget that everyone doesn’t know every single specialized term or abbreviation. So, we thought we’d put together a short list of some common terms you’ll hear, and what they stand for.

  • Conforming Loan: A conforming loan is a mortgage that fits Fannie Mae and Freddie Mac (see below) guidelines for the size of loan and loan underwriting criteria. In November 2019, the FHFA (Federal Housing Finance Agency) announced that the maximum 2020 conforming loan limit for a single-family house would be $510,400.
  • Conventional loan: A conventional loan is a home mortgage that isn’t provided through or guaranteed by a government organization. So, a mortgage that is offered by a private lender or a bank/credit union that isn’t a VA, USDA, FHA, or other government sponsored loan is a “conventional” mortgage.
  • Escrow: Escrow is an unusual word, but it just stands for the third party and time period where the money and contracts in a real estate transaction are verified and the property title is transferred.
  • Fannie Mae and Freddie Mac: These two people aren’t a married couple. They’re two different home mortgage associations that are chartered by the Federal government. Freddie Mac stands for the Federal Home Loan Mortgage Corporation. Fannie Mae stands for the Federal National Mortgage Association.
  • FHA: FHA stands for the Federal Housing Association, which was established as part of “New Deal” programs in the 1930s, and is part of the U.S. Department of Housing and Urban Development.

There are a lot of other specialized terms in the real estate and home mortgage industry. One of the advantages of working with an RE and mortgage professional is their ability to explain these terms to you, so you can understand what your choices are in homes to buy and loans that you can qualify for.

Sources

https://www.housingwire.com/articles/hey-housing-professionals-your-jargon-isnt-helping-consumers/
https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Announces-Maximum-Conforming-Loan-Limits-for-2020.aspx

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