When obtaining a home loan, you’ll receive two important documents from your lender: a loan estimate and a closing disclosure. On the surface, these documents are very similar, but they both serve different purposes. Here’s what you need to know about the differences between these two forms and what each means for you:
Insured Mortgages in KC for First-Time Home Buyers
Buying your first home can be an exciting and terrifying commitment, but there are options at your disposal to make qualification easier. Federal and state governments grant insured mortgages in KC through the Federal Housing Administration that encourage this first big step. These loans have:
- Lower down payments
- Reduced interest rates
- Fewer fees
- The ability to defer payments when necessary
Even those who have saved up for a good down payment may still be attracted to insured mortgages in KC for other benefits. The FHA guarantees their insured loans for lenders, protecting them against potential default from the first-time home buyer.
How to Qualify for an Insured Mortgage
Qualifications may vary by lender, but general guidelines include a:
- Minimum credit score of 580 or more
- 3.5 % down payment
- Complete documentation of your gross income and assets
- A debt-to-income ratio no higher than 43% of your monthly gross income
The property must also be your primary place of residence. Therefore, if you plan to rent it out, you may not qualify for this insured mortgage.
Qualifying as a “First-Time Home Buyer”
Many people assume that a first-time home buyer is someone who has never owned a home. However, the FHA considers anyone who has not owned a home for three or more years in this category. If you meet the other requirements, you can still reap the benefits of insured mortgages in KC.
Reasons to Choose a Conventional Loan
Insured mortgages in KC are not for all first-time home buyers. These mortgages have a set date for refinancing or changing the terms of your debt. Therefore you have less freedom to refinance than you would with a conventional loan. In addition, you may have to purchase private mortgage insurance which can lead to higher fees or a longer loan term. Be sure to discuss insured mortgages for first time home buyers with your loan officer to decide if it’s the right choice for you.