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3 Kinds of Mortgage Loans for Your Denver Real Estate Purchase


February 5, 2016

Purchasing a home in Denver is an exciting experience that enables you to determine which neighborhood and real estate property is most appropriate for you and your family. However, you also must make many important and consequential decisions during the process. Selecting which type of mortgage loan is most conducive for your financial situation is one of the first decisions that you must make. If you are interested in purchasing Denver real estate property, it can help to understand the types of loans that are available and the differences between each loan.    
  • Conventional Loan: Conventional loans are provided by private banking or mortgage lending institutions. Many factors influence the details of a conventional loan. The lender usually considers the income, credit, and debt-to-income ratio of the borrower to determine the interest and down payment rates on the loan. Credit is an important aspect of the conventional loan, for borrowers with low credit scores generally must pay exorbitant interest and down payment rates on the loan. As a result, conventional loans are more ideal for people with high credit scores. You should check your FICO credit score to determine if a conventional load is appropriate for you. The FICO credit score ranges from 300 to 800, borrowers with higher scores receive lower interest rates, and you would benefit from a conventional loan if your credit score is above the 620 mark and if your debt-to-income ratio is below the 40 percent mark.  
  • FHA Loan:  An FHA loan is another top mortgage loan that is commonly utilized for Denver real estate purchases. In contrast to conventional loans, the FHA loans are provided and insured by the US Federal Housing Administration. Many advantages accompany FHA loans. The FHA can provide you with mortgage insurance and then help you receive the loan from an FHA-approved lender. The insurance allows you to receive very reasonable interest rates, lower down payment rates, and more lenient qualification requirements. As a result, people with relatively low income levels or poor credit ratings can benefit from FHA loans. Although each loan can establish different standards, the FHA loans are usually optimal for people with a credit rating of approximately 500 to 600. Because the FHA does not impose income requirements when providing loans, anyone with a manageable debt-to-income ratio can qualify for an FHA loan, regardless of their specific income.
  • VA Loans:   VA loans are highly beneficial for people who are affiliated with the military. The loans are provided by the US Department of Veteran Affairs, and people who can qualify for VA loans include active-duty military personnel, veterans, National Guard members, and the spouses of military personnel who have died while on active duty. Several advantages accompany VA mortgage loans. The VA can connect you with private lenders that provide low interest rates and that do not require down payments. Many military personnel can also qualify for comprehensive financing on their home. However, when taking out the loan you typically must pay a funding fee to the VA, the fee is often 1 to 3.5 percent of the loan amount, and you might also need to pay for closing costs.
Contact Elevation Realty to help determine which mortgage loan is most conducive for your financial situation. Our expert staff focuses on providing our clients with personalized attention and dedication throughout the entire process. We make sure we are available to you without bounds.  Our goal is to provide you with the most reliable and up-to-date information to make the best decisions for you, your family, and your budget.
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