Identifying The Funding

The following article gives information on Identifying The Funding. Funding your home is an important step in your real estate purchase. You will have to think about funding issues, the moment you decide to buy a home. Fortunately, there are numerous avenues available for funding your real estate purchase. Familiarization with some terms of real estate funding will help you evaluate your options. Some such terms are listed here,

Identifying The Funding



Rate of interest

Every Home Funding Institution will charge you interest on the amount it gives you as a loan. This interest is cost of loan that you will take. Ask all your lenders the rate of interest and then compare these rates. A difference of 1% point for a loan of USD 500,000 will save you USD 336 per month.

Taxes on property

You will have to pay property tax on any new property, which you acquire. If you buy property closer to where you live now, you may save more then USD 100 per month. This extra money can be diverted to payment of your mortgages.

Homeowners Insurance

This is the insurance money you need to pay to acquire the home. Check in advance what is the premium you will be required to pay every month and net cost of insurance. All of these are additional cost to cost of your home. Now that you know what you will have to pay for that dream home, you can hunt for a funding source.

Sources of funding a real estate purchase include –

FHA Loans

Federal Housing Administration (FHA) has been providing funding assistance to home buyers since 1965. FHA does not give out loans perse, it is just an insurer of loans. A home loan insured by FHA means that, lenders can close the loan without worrying about a default. Today, the FHA limit of maximum mortgage that can be availed is USD 625,500. FHA loans are available to people who have lower FICO Scores, or people who have had bankruptcy declared. Even if a person has faced foreclosure, but maintained a good credit history thereafter; he / she can avail of home loans from FHA.

Veterans Administration Home Loans

People who have served in US Armed Forces may avail of home loans from private mortgage lenders etc. Veterans Administration insures a part of this loan. The guaranteed amount for such a loan is called Entitlement. Maximum entitlement for a loan of USD 144,000 is USD 36,000. One can get full funding for a VA Loan without any down payment. For loans backed by VA, no Private Mortgage Lending Insurance is required. You can get extremely competitive interest rates also.

Private Mortgage Lenders

You can get all the funding from private lenders as well. There are numerous lenders who will evaluate the credit history and provide you with a free quote of their charges as well. These lenders will offer you loan based on their evaluation of your credit history, cost of your home etc. There are numerous lenders who compete in this category and you can find many on Internet also. You will be provided with online quotes as well.

Funding your real estate property will be easy, if you have good credit history. In case you have had a bad history, your choice of funding institutions is limited, but not eliminated all together.

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