When you think about getting a mortgage, the first thing that comes to mind is the bank. Of course, banks offer a diverse array of home loan programs, and they are experienced where real estate lending is concerned. But are banks really your only choice when finding financing to buy a home?
Many homebuyers consult friends and family first when they think about buying a home. This is a smart move and indeed, a lot can be gained from the experience of people who already went through the home buying process. Still, this resource is limited.
If you intend to get the best mortgage program that caters to your individual need, know that there are other lending sources aside from conventional banks. Knowing them allows you to expand your options and not be limited to the offers by the big players.
Let’s look at these alternative mortgage sources.
Housing Finance Agencies
You may not know this but there are housing finance agencies in every state of the country specially established to help individuals, families, and businesses find financing for their different real estate needs.
Typically, programs carried by HFAs cater to low-to-moderate income borrowers who may have credit scores that are less-than-stellar or those who don’t have enough money to make a 5 to 20 percent down payment on a home, though middle-income earners are still welcome. Programs under the HFA have less stringent qualifications, although they do vary per program and per state.
To check the HFA programs available in your state, visitthe National Council of State Housing Agencies to access their directory.
USDA, VA Mortgages
USDA and VA home loans are specialized types of mortgages designed to cater to the needs of homebuyers in the rural area and those retired veterans and active military members, respectively.
These mortgages have borrower-friendly qualifications, dismissing the most common hurdles to mortgage approval such as the need for a credit check, a low debt-to-income ratio, and a hefty down payment. Although catering to a very specific demographic, you are in for the biggest benefits and the lowest interest rates should you qualify.
Credit unions are rapidly becoming popular among homebuyers nowadays. Compared to traditional banking institutions, credit unions offer lower interest rates, and personalized service. You have to become a member of a credit union to get access to its services, however, but it’s not difficult to get a membership.
Check your local credit union for its mortgage programs and membership requirements.