Purchase Loans Explained
Purchase loans are mostly used in buying homes and for real estate deals. The home purchased is most often the first home. Occasionally the purchase loan can also be used to acquire another home for rental purposes. The period to repay the loan is usually for a very long period spanning nearly fifteen years to thirty years. The interest is very low as the time period is long. However, it varies with the economy and the real estate market.
Many methods are applicable to acquire a home purchase loan. A mortgage broker helps to secure the loan through any local lender. After the sale of the new home, all the upfront costs and the details are taken care of. A purchase loan can be acquired through email also. An application form submitted online leads to contact with a lender locally appointed for the lending institution. Current income, credit reports, and details of the home to be financed are the factors that need to be approved by the lender.
Before going for a home purchase loan collect information on various lenders and their mortgage rates. There are many websites also from where you can get the required information. Later on, contact a lender and get him to explain the details of the entire procedure. All types of real estate can be purchase with home purchase loans. The exact terms and conditions vary from lender to lender. Residential, commercial, agricultural, recreational, government, and industrial are six major types of real estate. Except for government land, all the other types of property can be purchased with a purchase loan.
Getting a secure loan on first, second, or any investment property is easy with a home purchase loan. First, find out what type of loan you can qualify. Credit has to be analyzed for this purpose. The credit score should be above 620. Any credit score less than that qualifies for an FHA loan. This needs a 3% down payment. Private Mortgage Insurance or PMI as it is commonly known is an additional charge to your down payment. This is caused when you put down less than 20%. The mortgage insurance company does not insure the entire loan but only 40% to 25% of the loan amount. An initial premium and a renewal premium are added to the mortgage payment of the borrower. First Time Home Buyer Grants are available with the lenders and brokers in the city where you want to acquire the property.