Mortgage Options For Purchasing A Home

Starting your home financing journey is a great step in purchasing a home and it can sometimes feel a bit overwhelming. In this article we will review the many different mortgage options for purchasing a home. As a trusted realtor in Chicago, IL, Downers Grove, IL, and nearby suburbs, I’m here to provide you with some of your many mortgage options whilst also simplifying the process!

Mortgage Options For Purchasing A Home

 Let’s jump into the common types of loan options available to home-buyers:

1.        Conventional Loans

Conventional loans are one of the most common types of mortgage option, ideal for buyers with strong credit and stable income and work history. They typically require a 20% down payment to avoid private mortgage insurance (PMI).

Pros: Competitive interest rates & Flexible terms

Cons: Higher credit score often required & A substantial down payment

2.            FHA Loans

 (FHA) loans are sometimes great for first-time home-buyers, those with a lesser down payment or those with a lower credit score. FHA Loans allow for a lower down payment, often as low as 3.5%.

Pros: Low down payment & Easier to qualify

Cons: PMI is required

3.        VA Loans

Eligible veterans and current active-duty service members may take advantage of VA loans. These loans offer 0% down payments and often offer very favorable terms.

Pros: No down payment & No PMI

Cons: Must meet very specific service requirements.

4.        Jumbo Loans

For luxurious properties or properties that exceed the conventional loan limit amount, jumbo loans are an option to consider. This is particularly relevant for the upscale properties in suburbs like Hinsdale, IL, Western Springs, IL, Downers Grove, IL, Oak Brook, IL and more!

Pros: Access to Luxurious & High quality properties

Cons: Higher interest rates & Stricter qualification criteria

5.        Adjustable-Rate Mortgages (ARMs)

ARMs offer an initial lower interest rate that adjusts after a set period of time. These can be a great option if you don’t plan on staying in the property for very long.

Pros: Lower initial rates

Cons: Potential for increased rates in the future

6.        First-Time Home-buyer Programs

Both Illinois and local nearby counties offer assistance programs designed to make home-ownership more affordable and attainable for first-time buyers. -Grants, lower interest rates, or down payment assistance or some of your options

7.        New Construction Loans

If you’re looking to start fresh and build a home from the foundation and up, new construction loans can cover the costs of the purchase of land and construction of the property. These loans typically convert to a permanent mortgage once construction is completed.

Pros: Tailored specifically for building your home, interest-only payments during construction.

Cons: Higher qualification requirements &  A more complex process

8.        Renovation Loans

For those buying a property that needs work or planning extreme home renovations and repairs, renovation loans such as FHA 203(k) or Fannie Mae HomeStyle® loans can help finance both the purchase and the cost of renovations.

Pros: Funds for purchase and renovations & increased home value potential

Cons: More stringent process and may take longer to close

Purchasing a home in Chicago, il, Downers Grove, il  or its nearby suburbs can be an exciting step. With the right financing option, your dream home is within reach.🏡💼

Ready to start your journey? Reach out today! ✉️

-Shay Weatherspoon | Realtor | 630.729.4932

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