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Type of Loans

Loan Types in Truckee homesWhen buying property with a home loan there can be so many options is can get overwhelming. Here are some simple facts about the types of home loans and how they may apply to you.

  • Conventional Loan

This is probably the most common. A conventional loan is a basic home loan from a bank, credit union or mortgage broker that has a relatively low interest rate. This is typically due to the fact that there has been some money down on the property. A minimum amount down on a conventional loan is typically about 10% but can go as high as 90%. This works well for folks selling a home that will have a lot of equity in return or those that have saved at least 10% to buy a home.

  • FHA Loan – USDA Loan

These have a low to zero money down option but have higher interest rates and may carry primary mortgage insurance or PMI. Because the lender is offering you the loan with a much higher risk they require insurance in case you default on the loan and they must turn around and sell it for less. Having that cushion of insurance OR the money down as in a conventional loan will ensure the bank that they will not be at a complete loss if you default on the loan.

USDA loans have recently come into play in the last couple years and are even more strict when it comes to loan requirements and the type of home you buy. Banks want to ensure the home is in a specific area and meets certain guidelines before they allow you to borrow for that property. These loans are a great option for first time home buyers and do offer some incentives for buying a home with little to no money down.

  • VA Loans

A VA loan is permissible to veterans or those in the armed services only. The government ensures that those serving in the military will be allowed to buy a home with some excellent benefits. The home must also meet certain government requirements on safety and the seller is required to pay all closing costs.  This is an excellent option for those in service but there are some requirements that the military insists upon for each individual.

Finding the right loan for your Truckee real estate can seem confusing but with the right team on your side, you can enter into home ownership smoothly and hassle free. Contact me today to get started on pre-approval or to search for homes in our area.