Whether you are buying your first home this year or refinancing your current residence, picking the right home loan in St. Louis can be tricky. All home mortgages are not the same so choosing the correct loan is necessary to ensure future financial stability. Research is a must when planning to buy a home. There are a variety of home loans available in the region. Estimating how long you propose to own the home can help determine which type of financing is suitable for your situation. Evaluating your family’s personal budget is also essential when considering loan selections. Making an outlined budget ahead of time can save you and your lender a lot of headaches. The following is an easy guide for understanding your options as a home buyer:
Fixed Rate Mortgage Loan
Financial planning and predictable payments are easily assured with a fixed rate mortgage. Rates and payments stay the same for the life of the loan. External elements in the market do not affect FRMs at any time. When rates are low, FRMs are most favorable for borrowers. This mortgage gives the customer the ability to borrow and budget at the same time.
Adjustable Rate Mortgage
ARMs are considered a good decision if you have damaged credit and need to refinance or will be staying in your new home for a limited duration. The beginning payments are set at a low fixed interest rate for a certain period of time. Most commonly the initial rate is fixed for the first five years of the loan. ARMs generally possess lower average monthly payments and have an interest rate ceiling. Although there is a rate ceiling, there is still risk involved. Interest rates still have the possibility of fluctuating during the end of loan term so be prepared for payment amounts to change. Borrowers sometimes end up owing more than they originally borrowed even if all costs are paid on time.
FHA Loans
A FHA loan is a reasonable selection for anyone looking for home loans in St. Louis. These loans are insured by the U.S. Federal Housing and Development Administration. It can be easier to qualify for this loan because of looser credit criteria and lack of income limits. There is a stigma FHA is only for first time buyers but anyone can apply and it can even be used to refinance. Since borrowers normally have a low down payment, this choice has become increasingly popular.
Veteran Affairs
VA home loans in St. Louis are guaranteed by the U.S. Department of Veteran Affairs. The program is only available to United States veterans, active duty military personnel, reservists, and surviving spouses of those who died in or as a result of service. VA loans are designed to help qualified individuals purchase properties with little to no down payment. The credit requirements are usually more relaxed. The amount of the loan can be the complete purchase price of the home and can be refinanced down the road.
ProLoan
ProLoan is a program which provides home loans in St. Louis to people who would like to build or purchase a newly built home. However, these homes must be built by approved skilled union craftsmen. Some lenders will offer rate locks for 45-90 days for the borrower and the approved builder at no additional charge. During construction, rates may rise and these locks will protect the customer as well as their builder. Only five firms in the region offer ProLoan.
Finally, here are a couple things to keep in mind when making the final verdict on your home loan in St. Louis. Median home listing prices in St. Louis and the surrounding area tend to be around $154,900. Although you may be approved for a certain amount of financing, make sure payments will be affordable for your household budget. Remember monthly mortgage payments added with non-housing expenses should not be more than 41% of your household income per month.
Let Cornerstone Mortgage, Inc. jump start your home buying process today. Cornerstone’s experienced professionals will happily answer any questions you may have regarding future home loans and refinancing. Feel free to call us toll free at: 800-965-9910 or visit our contact webpage.
The above information is for educational purposes only. All information, loan programs and interest rates are subject to change without notice. All loans subject to underwriter approval. Terms and conditions apply. Always consult an accountant or tax advisor for full eligibility requirements on tax deduction.
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