Home Mortgage Advice

Flagship Financial is a company that I consulted about home mortgages. I quickly discovered that looking for a home mortgage is a very difficult and involved process. In fact, there are several types of loans to consider. For example, VA loans, FHA loans and conventional loans. I quickly learned that it is important to be able to distinguish between the types of loans and weigh the advantages and disadvantages associated with each individual loan program.


Loan Programs

First, it is important to understand that all loans are made to individuals by a financial institution like Flagship Financial or other approved lending sources like banks. All of the loan programs have special requirements that must be met before the loan is approved by the lending institution. Let’s take a look at the loans to determine which is best for your situation.

Conventional Loans

It should be noted that FHA loans and VA loans are backed by the government. They both have distinct advantages and disadvantages. However, a conventional loan is not backed by the government. Lenders are on the losing side, if the applicant for the loan does not pay back the loan. Therefore, the applicant is also required to purchase mortgage insurance to cover their loan in full, if they default. In addition, conventional loans require higher down payments. For example, at least 20 percent or more. Some applicants might find it difficult to make that down payment. Certainly, qualifying for conventional loans is much more difficult than other loan programs.

FHA Loans

An FHA Loan is backed by the government. The loan is paid in full to the lender, if the loan applicant defaults on the loan. Therefore, the applicant is not required to purchase private mortgage insurance. An FHA loan also makes it possible for the applicant to make much lower down-payment. Generally, around 3.5 percent or more on the price of the home and closing cost on this type of loan is much lower than a conventional loan. Generally, qualifications for this type of loan are less complicated and most people are eligible to apply for this loan.

VA Loans

VA loans generally have more relaxed qualifying standards. This loan is backed by the Veterans Administration and only available to certain individuals that apply for the loan through VA approved lending institutions. Usually, the qualifications are that the applicant is a citizen, veteran, reservist, national guard, or surviving spouse of a veteran. VA loans do not require a down payment or private mortgage insurance, and they are guaranteed by the government.

Anyone with more questions about the type of loan that is best for their situation should consult with a financial advisor or lending institution for more information.