First time home buyer!!
Being that theres now a $8000.00 tax credit to first time home buyers. I was looking for some wise wisdom on what type of mortage to consider FHA, VA, or CONVENTIONAL loan for my first home purchase.. Any responces are greatly appreciated
Answers
2222 points
readytoretire answered 9 months ago …
Both the FHA and the VA loan programs are from our friends the government. So there are some advantages and disadvantages for each.
FHA typically require a smaller down payment than a conventional, include closing costs in the loan, or include improvement costs in the loan. For more information on a FHA loan, see http://www.hud.gov/buying/loans.cfm
If you are a veteran (and some of the public health services), you may get a VA loan. A VA loan doesn't require PMI insurance, requires no closing down payment, and limits the closing fees. For info, see http://www.militaryspot.com/valoans.htm
It would be good to investigate any and all. Some of the loans, like a VA are assumable, so you could get one even if you are not a veteran.
4085 points
EthanR answered 9 months ago …
A conventional loan is always the best way to go, if you have some cash to put down. Both FHA and VA have additional fees that the borrower has to pay. Right now you may have to put down 5% or more to take a conventional loan, whereas FHA is only 3.5% and VA is zero down. But the interest rate should be better on a conventional loan, so if you plan to live in the home for a long time, that can save you a lot of money over the long run.
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368 points
ads answered 9 months ago …
Unrelated to where to get financing, as someone who has owned several homes and who had previously been in the construction trade (owned and operated my own construction company and who has a residential builder’s license in Michigan). When you look at homes, be sure to do your research and look very closely at what you are purchasing. I am always amazed at just how poor the quality is in most homes, even those builders who claim to be quality custom home builders. Most “energy efficient” homes, while better than average, are still inefficient. Likewise many builders provide very poor quality workmanship, even when it comes to expensive homes. Also note that the majority of “home inspectors” are doing that because they had trouble holding down a job in the construction industry, thus it is even more difficult to find a home inspector to look at possible problems that can be trusted and that truly knows what to look for than it is to find a quality builder.
If you don’t plan to live there forever, then look for features that will allow you to resell the home a few years down the road once the market improves. If you do plan to live in the home for a very long time, be absolutely positive that it is exactly what you want, and if it isn’t then keep looking, as right now there are more homes on the market than at any time in the past so there is a lot to choose from. It is also important to plan for the “unexpected” maintenance. The best way is to figure that you will need to have at least the value of one monthly mortgage payment per year in these types of expenses, be it plumbing problems (especially if the house has been empty for more than a couple of months), appliance replacement, etc.
