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First Time Home Buyers

If you are a first time home buyer, you probably have many questions about how to make your dream of owning your own home a reality. Most people will take out a mortgage loan to finance the purchase of a home. A mortgage works much like any other loan: You borrow money from a bank and then pay it back over time. A mortgage loan is the largest loan that most consumers will take on during their lifetimes. Because of this, it's important for home buyers to understand mortgage loans and which mortgage product is best for their budget. Lower interest rate, or no closing cost, loans do not necessarily equal best deals. Those buyers who do their research will dramatically increase their odds of taking out the mortgage loan that best fits their needs.

Types of Mortgages

You can choose from several different types of mortgage loans. Conventional, FHA, VA and USDA are types of mortgages that are offered at Union Bank.

A Conventional Mortgage refers to a loan that is not insured or guaranteed by the federal government. A conventional, or conforming, mortgage generally requires a 20% down payment, a minimum credit score of 640 and a debt ratio for the borrower that does not exceed more than 40% of his gross income. The closing costs are usually less than government insured, or guaranteed, loans. A conventional mortgage may have either a fixed or adjustable interest rate. The FHA, VA and USDA loans are insured, or guaranteed, by the federal government and allow the borrower a more flexible down payment, sometimes as low as no down payment.

The FHA (Federal Housing Administration) Mortgage is a great product for many first-time homebuyers. Thanks to less-rigid borrower requirements, FHA loans require a low minimum down payment (currently 3.5%), reasonable credit expectations (620 minimum credit score) and more flexible income requirements (debt to income ratio up to 50%).

The VA Loan Program (guaranteed by the U.S. Department of Veterans Affairs) is the home loan program on the market for veterans and military families. These flexible, government-backed loans come with significant benefits that open the doors of homeownership to veterans who might otherwise struggle to obtain financing.VA loans require no down payment or private mortgage insurance. They feature competitive rates and terms and allow qualified borrowers to purchase a home with little to no money out of pocket.

The USDA Loan Program, also known as the USDA Rural Development Guaranteed Housing Loan Program, is a mortgage loan offered to rural property owners by the United States Department of Agriculture. USDA loans require no down payment, you may finance up to 100% of the property value. However, you must meet the income restrictions. To be eligible, you must be purchasing a property in a rural area as defined by the USDA.

For more information regarding the right mortgage loan for you, please call us today at (870) 460-6400.

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