Buying Options
Options when purchasing real estate
If you have sold in the past or even purchased a home, you may have seen different terms such as Cash-out, conventional, FHA or VA. While Enterprise real estate agents know these terms and can convey the information to their buyer or seller, it helps to have a grasp of what these terms mean beforehand.
CASH OUT
- Cash out means the buyer has actual, exact cash to pay for the property out right without securing a loan. The closing time for these purchases can usually be completed much quicker as there are less parties involved and the buyer simply brings the money to closing for the seller and the deal is completed.
CONVENTIONAL LOAN
- A conventional loan is probably the most common as it requires a certain percentage down and the balance is amoritzed over 10-40 years depending on the loan terms. There are conventional loans that break down into 80% / 20% where the buyer actually applies for two loans to cover 100% of the property and brings no money to closing. These loans are not as easy to obtain anymore but with good credit can still be found. A conventional loan typically helps those selling one home to buy another and can put down a substancial amount at closing. The loans are often lower interest rate and better terms.
FHA LOAN
- An FHA loan is a federal assistance mortgage loan in the United States insured by the Federal Housing Administration. The goal of an FHA loan is to make it self-supporting, based on insurance premiums paid by the buyers. FHA loans usually require a minimum of 3% down and will have the added cost of mortgage insurance to cover in case of default. The benefit is most buyers don't have to have excellent credit to qualify but the home they purchase does have to meet certain safety standards.
VA LOAN
- A VA Loan is available only to those serving or have served in the US military. The VA loan guarantees a potion of the loan so the lender is protected against losses if the borrower does not make the payments and defaults on the loan. This VA guarantee effectively replaces the security a lender normally receives by requiring a down payment on the property. This can also help the buyer purchase the property with little or no money down. (visit our Everett Veteran real estate services for more information on VA loans.)
For more information on learning which loan you might best be suited for, submit the form below and we will contact you shortly with the requested information. We service the entire Enterprise Alabama real estate area.
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