What is the best loan for someone who has excellent credit and a large down payment?

This might seem silly to ask, but I do see people getting the wrong mortgage for their situation simply because someone told them about a special program.

If you have a decent down payment, say 20% or more, have excellent credit, and you have documentable income and assets, then you want a plain vanilla, Conventional Loan.  These loans are also called Fannie Mae Loans or Freddie Mac loans.

I have seen people seeking a VA loan because they are a Veteran and they feel they need to use their VA benefit.  VA loans are ideal for the Veteran who doesn’t have a down payment, as they can go up to 100% loan to value.  The down side is that VA charges the Veteran a funding fee that ranges from 2.35%-3.3% on top of the mortgage balance.

The same applied to FHA or USDA loans.  Yes, they are good for some people, ie first time home buyers, someone who needs help with the down payment, or some other situation.  FHA loans have Mortgage Insurance Premiums that are added to the loan balance and have a month fee as well.

Don’t get fooled by the difference in rates.  Right now the Conventional loans are about .25% higher than VA, FHA, or USDA loans.  They don’t have funding fees or Mortgage Insurance Premiums added to the loan balance or payment.

Any ethical mortgage loan officer will look at all options and make a recommendation based on your situation.  Every body’s mortgage needs are unique.

Leave a Reply

Post Navigation

%d bloggers like this: