Rexburg ID home loans are always a question on the mind of home seekers. The most common question is "How much can I afford?" The answer to this question will come from your lender. Understanding the types of loans available to Rexburg home buyers can help. For example, what is the difference between a fixed rate and adjustable rate mortgage? Do you qualify for a FHA / VA loan? Are there any city, county, or state programs for first time home buyers that you may qualify for? Here is a brief explanation of what each of these home loans are and how they can help you get into a new home.
All loans have a time period and a rate associated with them. Fixed rate loans lock in both the period of time and the rate. This type of loan can create peace of mind because when a buyer locks in a rate, they know that they will have that rate for the entire time period of the loan. The most common fixed rate loan is a 30 year fixed rate. At the time of this writing, a 30 year fixed rate loan is floating somewhere between 3.5% and 4.0% depending on the lender and qualifications of the buyer. So if you locked in today, you would have that rate for the full 30 years. If rates go up to 10%, you have a great loan locked in.
Adjustable rate loans, sometimes referred to as ARM loans, do NOT have a fixed rate and although their overall time period is fixed, there are periods within the ARM loan that are used as points of rate re-evaluation. An adjustable rate mortgage may start out at 2.5% for the first 12 months. This would allow some buyers to get into a home they may not otherwise qualify for. But after the first 12 months this rate may be re-evaluated and go up or down based on an index used by the lending industry. ARM loans are often used by borrowers that only plan on staying in a property for a short time. They are also used by people who know their income will increase in the near future.
FHA stands for The Federal Housing Administration. VA stands for Department of Veteran Affairs. The FHA and VA do not actually make loans. Instead, these government entities establish guidelines for issuing loans that the banks must follow if they want the loans guaranteed by the government. If you have a past bankruptcy or low credit score, do not discount this option. You may still have an opportunity to participate.
Benefits of getting an FHA insured loan include easier qualification for low and moderate income borrowers, low down payments, and relaxed income requirements when applying for a fixed rate mortgage.
VA loans are similar to FHA in that they are loans made by banks that are guaranteed by the government. But there are some key differences. To qualify you must be serving in the military or be classified as a veteran. If you meet the qualifications, you will have the benefit of receiving a zero down home loan. In addition, you will be exempt from PMI which is private mortgage insurance. This can reduce your monthly payments.
Local loan assistance programs can be very helpful when purchasing a home. Doing a little research can pay off big. Your city, county, or state may have first time buyer programs that offer low interest loans, down payment money, and other benefits. Do a search on online for your local city and county programs. You may find the help you need to get into a home sooner than you thought.
In summary, make sure that you look at all your options for Rexburg ID home loans. Review your finances, talk to several lenders about programs that may fit your financial profile, and then get pre-appoved for a loan as you look for homes for sale. You could just save yourself a lot of money and time looking at real estate.