Choosing from the wide variety of Missouri home loans available can be a strenuous task, even for the seasoned homebuyer. Industry terminology can be overwhelming and hard to understand. Here is an overview of common financing options available nationally and locally.
15 and 30 Year Fixed-Rate Mortgages
These are some of the most accessible home loans. Missouri residents often choose one of these loans primarily for its predictability. A fixed-rate allows the borrower to have peace of mind, knowing their payment will not change over time.
Other benefits include:
- Your monthly payment stays the same for the life of the loan.
- Interest never changes.
- Usually the term is 30 years but many mortgages can be written for 15 years.
- Overall interest the consumer will pay is higher on a longer-term loan than on a shorter-term.
- Great choice for people who plan to stay in the home for a long time.
Adjustable Rate Mortgage
Adjustable mortgages can be risky or advantageous, depending on the length of time you plan to stay in your home.
- Initial rate, which tends to be lower, is set by the bank or lender until the first reset date.
- Appropriate for buyers who expect to move again quickly.
- Accept the risk that your payments may increase in the future.
- Includes periodic and overall rate caps, which set a limit on how high your interest may go.
- Keep payments stable during the first years of the loan.
- Opt for bigger payments and pay off your loan over a shorter period of time.
- Could enable borrower to be approved for a larger loan amount.
FHA financing is one of the most affordable options for consumers. It is designed for people who are in need of flexible underwriting guidelines and have little money to put towards their home.
- Open to all income levels.
- Down payment can be as little as 3.5%.
- Seller can pay up to 6% of closing costs.
- Qualify for a loan two years after bankruptcy and three years after foreclosure.
- Good fit for those with poor credit, limited income and lack of funds.
- No prepayment fees.
- Co-applicant can qualify even if they will not be living in the home.
Insured by the Department of Veteran Affairs, servicemen purchasing a house should be aware of VA home loans. Missouri provides an array of programs that can assist potential homeowners. The First Place Loan Program is designed to help first time homebuyers and veterans with down payment and closing assistance.
- Financing for eligible service members and surviving spouses.
- Requires little to no down payment fee.
- There are limits on the borrowing amount.
- Flexible qualification standards
- No monthly insurance required.
- Closing costs may come in form of a gift or grant.
- Fixed and adjustable mortgages.
- One time funding fee is normally required.
- Can only be used for primary residence.
USDA loans are backed by the Rural Housing Service and are provided by private lenders. The program is designed to accommodate low-income, rural families who are unable to obtain conventional financing for adequate housing. The property must be located in a designated rural area in order to obtain one of these home loans. Missouri has many communities in which USDA funding can be used.
- Can be used to purchase, refinance, renovate, repair or relocate a home.
- Possible to finance up to 100% of the home’s appraisal value with zero down out-of-pocket.
- Mortgage insurance is not required.
- Borrowers with less than perfect credit can qualify.
- Must pay a one-time 2% funding fee.
- Typically 30 year fixed-rate mortgages.
- Cannot purchase additional home within commuting distance of the residence you wish to buy.
- Apply with the approved lender of your preference.
For more information on home loans in Missouri, contact a Cornerstone Mortgage, Inc. loan officer today. Their professionals will be happy to answer any questions you may have about home financing.