Do I Choose My Loan or Does It Choose Me?

 

Pic credit Gregory Szarkiewicz

You may ask yourself, do I choose my loan or does it choose me. Choosing which California home loan to use when purchasing a home can seem daunting regardless if you are California a first time homebuyer or a move-up buyer or a refinancer.  But with today’s market the loan almost chooses you.  That’s right, the loan chooses you.

Why do I say that?  It’s like a flow chart.  You can start with your credit score.  Have a 650 credit score?  Right off the top we know that a Fannie Mae conforming loan won’t work, you’ll have to go FHA or another state bond type program, which can be just as good as Fannie.

What’s that you say, you make over $150,000 per year in household income?  Than that income may put you over the top median income limit in your county, (each California county median income varies) so the state bond program is out and FHA is the home loan option that is remaining.  Again , a fine option.

The loan programs available these days are starting to exhibit their own unique characteristics that separate themselves from each other.

What’s that you say, you want an interest only payment option?  That may not be eligible depending on which loan program you fall into.  If it is available, be prepared to pay extra fees to obtain that loan as well.  This loan has been blamed by many for being a cause of increased loan delinquency so many lenders have discontinued it.  But it is still available on a limited basis depending on your state.

Rates will differ from loan option to loan option.  Want the best interest rate?  Again sometimes the rate chooses you.  A 780 FICO socre has more loan options than a 630 FICO score.  Can both of them buy homes?  Yes.  It will depend on your ability to provide a downpayment and come up with the closing costs as well which can differ for each borrower depending on their credit scores, downpayment, acccumulated assets, and the common sense, or lack thereof, of the lender and it’s loan underwriters.

Want a lender who charges the lowest in fees to do business with them?  It’s the same drill as above.

It all starts with a conversation with a Loan Originator.  During the conversation, the Originator or Loan Officer, should be asking questions that pertain to your credit, downpayment, income, assets, how long you are looking to reside in this particular property,and most importantly a payment that you are comfortable paying.

From there, without running a credit report, the Originator should be able to give you a few choices and put them on a worksheet of sorts so that you can compare them side by side.  It’s at that point you will see that a California mortgage is not a one size fits all.  Each scenario is different and may call for a different type of loan than what you had thought.

All California home loans accomplish the same thing, buying and owning a home.  The real estate loans are different from each other, but each has it’s advantages that help people achieve homeownership.

If you have a question in regards to the content of this email, or the do I choose my loan or does it choose me article please let me know by clicking here.

Best,

Kevin Walton

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