Buying a home in 2022 isn't like it was in 2002. The new home landscape has changed, and so has the cost.
If you're a new homebuyer, or even if you're looking to trade up to a larger home, it's important to know all of your financing options before you start shopping. This will give you the best chance of maximizing your budget and getting into the home of your dreams.
But new home financing can be complicated... And there are so many different options! That's why we've put together this guide to help you understand your financing options and make the best decision for your new home.
Different Types of Home Financing Available for New Home Buyers
If this is your first new home purchase, congratulations! You're about to begin a new and exciting chapter in your life. But before you start shopping for your new home, it's important to understand the different types of
financing available to new home buyers.
Conventional Loans: The most common type is a conventional mortgage. A conventional mortgage is a loan that is not insured or backed by the government. It is typically a fixed-rate loan, which means that the interest rate will stay the same for the life of the loan.
FHA Loan: FHA loans are insured by the Federal Housing Administration (FHA). The interest rates on FHA loans are often lower than conventional loans, because the FHA insures the loan against default.
VA Loan: A VA loan is a mortgage that is guaranteed by the Department of Veterans Affairs (VA). If you are active or retired military, or a qualifying spouse, you may be eligible for a VA loan. You may also be able to forego a down payment with a VA loan.
USDA Loan: A USDA loan is a mortgage that is backed by the United States Department of Agriculture (USDA). USDA loans are available to low and moderate-income borrowers who are looking to purchase a home in a rural area. The interest rates and down payments on USDA loans are often lower than conventional loans.
Different Types of Home Financing Available for Move-up Buyers
If you're considering trading up to a larger or more expensive home, or even a second home, you may need a different type of financing than you used for your first home.
Jumbo Loan: A jumbo loan is a mortgage that exceeds Fannie Mae and Freddie Mac's conforming loan limitations. Jumbo loans typically have higher interest rates than conventional loans, because they are not backed by the government.
Home Equity Loan or Line of Credit: If you have equity in your current home, you may be able to use it as collateral for a home equity loan or line of credit. This can give you the cash you need for a down payment on your new home.
Bridge Loan: A bridge loan is a short-term loan that is used to finance the purchase of a new home before the sale of your current home is complete. Bridge loans typically have higher interest rates than conventional loans, but they can be a good option if you need to move quickly.
How Do You Know Which Type of Financing Is Right for You?
Whew! That's a lot of different financing options! So which one is right for you?
The best way to know is to speak with McKee Homes' preferred lender;
Vision Lending can help you understand your financing options and find the best loan for your new home.
When you work with our preferred lender, you'll also benefit from:
- A streamlined loan process
- Competitive interest rates
- A wide variety of loan options
- Local decision-making and processing
- Low origination costs
- Personalized service from start to finish
If you're ready to start shopping, the next step is to get pre-qualified for a mortgage. Getting pre-qualified is a quick and easy process that will give you an idea of how much home you can afford. Then you can start shopping for your new home with confidence, knowing what your monthly budget will be for years to come.
If you're not quite ready to get pre-qualified, that's okay, too. You can browse our website to learn more about our new homes and North Carolina communities. When you're ready, we'll be here to help you through the home financing process!
