5 Mortgage Loans You Didn’t Know Existed

Written by Posted On Monday, 02 July 2018 10:40

In today’s competitive housing market, real estate agents are looking for an edge, and buyers are looking for whatever it takes to make their homeownership dreams a reality.

The good news for both parties is that while the number of active homebuyers in the marketplace exceeds the supply of move-in quality properties for sale, there are a wide variety of mortgage options that can help expand housing options and put one’s dream home within reach.

These days, it’s not just about deciding between 15-30-year  or fixed and adjustable mortgages. From renovation loans and VA loans, to doctor and construction loans, there are a variety of customizable home financing options designed to fit any homebuyer’s budget, needs and lifestyle.

Not only do these niche mortgage solutions open the door to homeownership for more buyers in the marketplace, real estate professionals are taking advantage of the benefits these loans provide to cut down the amount of time they spend showing homes and ultimately closing more deals.

Here are five niche mortgage loans you’ll want to ask your mortgage lender about before submitting your next offer. After all, your mortgage lender is a key member of your home buying team and should be prepared to provide you with guidance and advice regarding which financing options are the best fit for your specific circumstances.

Renovation and construction loans

Have you been on the hunt for a home in today’s seller’s market? With a low supply of move-in-ready homes and high competition, a renovation loan might be the mortgage solution you’ve been looking for.

In a market where home remodeling is hitting all-time highs, and rising home values are prompting many (especially younger) buyers to consider older, more-affordable “fixer uppers,” a renovation loan, such as the 203(k) loan, can help borrowers turn any home into the one, without dipping into personal savings and breaking the bank. With the ability to bundle the purchase price of a house and home improvement costs into a single mortgage loan, borrowers can pay off the cost of home renovations over the life of their 15- or 30-year mortgage, significantly reducing the upfront investment needed to fund improvements.

Whether you want to paint the walls, replace the roof, buy new appliances or even add an addition, the 203(k) loan program allows homebuyers to walk into any home with an open mind and an optimistic outlook on the possibilities that exist.

For those who are looking to build new, one-time close construction loans streamline the lending process for new construction homes, offering borrowers a variety of different benefits, including the ability to build new without breaking the bank. For example, financing starts at 3.5% down for FHA and 0% down for VA.

Rural development (RD) loans

For those looking to purchase property in a rural area, the USDA rural development (RD) loan is likely to be an attractive option—in many cases the most affordable and cost-efficient way to buy a house. Advantages of RD loans include zero-down financing and the ability to finance repairs. The caveat is that to qualify, homes must be located in an eligible rural area. To find out if a property qualifies for this program, visit the USDA Rural Development website.

VA loans

VA loans are a mortgage designed exclusively for Veterans. This type of loan is available to active duty or reserve members in any branch of the U.S. Armed Forces. Surviving spouses of a deceased Veteran are also eligible. The benefits of a VA loan are significant and extensive, and include flexible credit requirements, lower interest rates, zero down payment, and no private monthly mortgage insurance (PMI).

Doctor loans

While this zero-down loan is designed for anyone with a medical degree (M.D., D.O., D.M.D., D.V.M. or D.D.S.), it comes with a few benefits that are particularly appealing for new professionals just beginning a career in the medical field.

When applying for a mortgage, homebuyers typically have to verify they’ve worked in the same industry for two years. New medical professionals, especially those relocating for a residency, may not have that level of experience yet. The Doctor Loan waives this requirement, allowing applicants to provide an executed employment contract with a guaranteed wage, and number of hours to be worked, as their proof of employment.

Doctor Loan borrowers can also close within 60 days of their employment start date. This means they can close on their new home even if they haven’t started their job yet, a benefit often appreciated by those relocating for their residency.

This list is merely a sample of the various mortgage options available today. For homebuyers, finding the right mortgage option not only saves time and money, it can make the difference between a missed opportunity and a dream fulfilled. For real estate agents, the ability to present clients with creative financing solutions in a challenging market is a tremendous value add. Therefore, it’s essential for consumers and real estate agents alike to identify a lending partner that can offer competitive solutions built for today’s competitive housing market.

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Tim Ross

Tim Ross is CEO of Ross Mortgage Corporation, a residential mortgage banking company based in Troy, Michigan and one of the top independent lending firms in the Midwest.


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