Financing is one of the most significant differences between purchasing a single-family home and a different type of property.
When people think about owning a home or buying residential real estate, they often think of a single-family home. After all, purchasing this type of property is common. However, other residential real estate options might better suit your lifestyle and financial situation.
Financing is one of the most significant differences between purchasing a single-family home and a different type of property. Habitable, existing homes are typically financed with an FHA loan, conventional mortgage, jumbo loan, or VA loan. However, there are other mortgages for other types of properties.
There is generally a little less competition for condos than for single-family houses. This makes these properties more attractive to people who want to buy a home but don’t want the hassle of a bidding war. Condos are often ideal for young families and professionals just starting out. It’s also an excellent option for empty-nesters who are looking to downsize. Regardless of your situation, there are several benefits to owning a condominium that is worth exploring.
It was problematic to finance condos in the past if they didn’t fit within the conventional guidelines of Freddie Mac or Fannie Mae. Condominiums that don’t adhere to the appropriate guidelines are referred to as non-warrantable condos, which require non-qualified mortgage financing.
Current rules for FHA loans allow you to purchase a condo within an unapproved complex, known as a spot approval. FHA loans generally offer lower down payments, interest rates, and credit score requirements.
Many people choose to build or custom-design a new single-family house. This is accomplished through a construction loan. There are several options when it comes to choosing the right construction loan. One way is to have one loan that funds the construction phase, and then as your home approaches completion, you’ll get another loan that pays off the construction loan and becomes your permanent financing.
A construction loan is interest-only, which means you only pay the interest. This can be done in monthly payments or rolled into your loan. Permanent financing is a traditional loan where your monthly payments go toward principal and interest, just like a standard mortgage.
Do you enjoy DIY projects? Are you a fan of HGTV? Many people buy fixer-uppers because they love the challenge of renovating their own homes. You can buy a house like this with a renovation loan. Whether the house needs a minor fixing up or a complete renovation, there’s a loan for that.
Renovations loans finance the cost of the work through your mortgage and can then be used whether you’re renovating your current home or buying a new property that needs work. One of the best parts about these loans is that they don’t require any money out of pocket.
People purchase investment properties not because they’re looking for a home to live in, but one that can make money. Real estate can be an excellent way to invest as long as you understand the risks and stay within your budget.
Solutions for You
Just as a mortgage is available for every property type, there’s also a home loan program for every nontraditional borrower. Are you ready to get started? The Better Rate Mortgage Team can walk you through each type of property and their corresponding financing options. Contact us today to find the right solution for you!