Financing Your Home
Financing your home will depend on getting pre-approved, understanding what kinds of loans you qualify for and your maximum loan amount.
What is pre-approval?
To be “pre-approved” means you have a letter from a loan officer stating that they have run your information through a preliminary approval process and “pre-approved” you to buy a home.
While there are more steps for final approval, a pre-approval letter assures a seller that, according to the information you have provided, you are qualified to buy the home. This is a great comfort to sellers who are always nervous about sales falling through.
In a competitive market, sellers want to know that you have been pre-approved before they accept an offer. If you’re in a situation where a home has multiple offers from buyers, you’ll definitely want to have your pre-approval letter ready to go. Buyers with a pre-approval letter are much less risky for sellers.
You can either get pre-approved before finding a real estate agent, or have your agent direct you to a loan officer who can guide you through the process.
At Omaha Homes Group, we can refer you to reputable loan offers that communicate well, are knowledgeable, and know how to navigate the pre-approval process.
What kinds of loans exist to help you finance your home?
There are a wide variety of options for home loans and every buyer’s situation is unique. Ultimately, you and your loan officer will determine what type of financing you qualify for and what would be best for your specific situation, but here are a few example options.
FHA loans (Federal Housing Administration) have been helping people finance their home purchases since 1934. These loans are insured by the U.S. Department of Housing and Urban Development (HUD) so that lenders can give buyers better deals and work with buyers who might otherwise not be pre-approved.
FHA loans are great for home buyers who may be seen as higher risk borrowers (lower credit scores, less money for down payments) and have a better chance of being pre-approved for FHA loans.
Conventional Home Loan
Conventional loans are not government-backed loans, like FHA loans or VA loans. They’re backed by private lenders and therefore, tend to be best for well-qualified buyers.
VA Home Loan
VA Loans are available to servicemen and women, veterans and eligible surviving spouses of the armed forces to help them buy, repair or retain a home. A portion of the loan, which is provided by private lenders, is guaranteed by the Department of Veterans Affairs (VA). This provides lenders with extra confidence and makes loans to our country’s serving military and veterans more attainable.
Seller Funded Loan
Borrowing from the bank may be the most obvious option, but it’s not the only option. Some sellers may be willing to finance the sale of their own home to buyers who don’t qualify for bank loans due to low credit scores, lack of credit, or being self-employed and lacking documentation of income. The seller assumes all the risk in this situation, which is why it’s rare to see a seller-funded loan.