Financing Your Home

If you're buying a home, obtaining financing is a critical step in the process. Once you have the seller's acceptance of your offer, you'll need to decide what type of financing to obtain.

Certain key lenders are primary sources for mortgage money. They include savings and loan associations, mortgage bankers and commercial banks. Some real estate firms have in-house mortgage companies, which may simplify the financing process.

When you apply for the loan, your lender will ask questions about your income, assets, debts/liabilities and employment history. You will need to supply account numbers for any assets and loans, as well as employer's names and addresses.

Be prepared to ask the lender questions, too. Find out about different types of mortgages available, whether mortgage insurance is required and what types of fees will be charged at closing.

Financing Options

If you're planning to purchase a home, check your financing options. The number and variety of financing options may seem overwhelming at first, but most fit into these categories. Conventional mortgages are labeled as such to differentiate them from government-backed loans such as FHA or VA loans.

Adjustable-rate mortgage (ARM)

A loan with an interest rate that fluctuates according to the movements of a predetermined index.

Farmers Home Administration (FmHA)

These government loans are available to persons of moderate or very low income in rural or non-metropolitan areas.

FHA-insured loan

Insured by the Federal Housing Authority, these loans will insure a mortgage on a new or existing single-family house for a high percent of the property value. Downpayments are low and loans are assumable.

Fixed-rate mortgage

A loan with an interest rate and monthly payments that do not vary.

VA-guaranteed loan

Guaranteed by the Veterans Administration, these loans are available to eligible veterans to buy, refinance, construct or repair a home.