Finding the right financing for the purchase of a home is as important as finding the right home. Just as you shop for a house, you should shop for the right financing method that best fits your needs and lifestyle. There are many options available today. Here we'll take a quick look at some of them. There are details such as closing costs, points and more to be considered with each option. You should talk with your lender for full disclosure of requirements and responsibilities.

     Traditional Mortgage Options

     All mortgages are called "conventional" unless they are government-backed loans. Conventional mortgages are available from private lenders such as banks, savings and loans, finance companies, etc. Examples of conventional financing are:

• Conventional Fixed Rate Mortgages: This traditional mortage option is a loan with a fixed interest rate with equal payments during a set period of time, usually 30 years.
  
• Adjustable Rate Mortgages (ARM): With this loan, the interest rate changes throughout the term of your loan to stay current with present interest rates. Many buyers find this option more appealing when interest rates are high and are expected to go lower.

     Federal Governement Mortgage Programs

• Federal Housing Administration (FHA): Lenders offer FHA loans on new and existing homes for as little as 3 percent down. Down payments are usually low and FHA mortgages are assumable.
  
• Veterans Administration (VA) Guaranteed Loans: The Veterans Administration guarantees lenders against loss if the property is foreclosed due to default. They are available to eligible veterans and can be used to purchase, refinance or construct a house.
  
• Farmers Home Administration (FmHA): The government makes FmHA loans available to persons of moderate to very low income in rural or non-metropolitan areas.

      Alternative Financing Options

• Lease/Purchase Agreements: Lock in the price of your home today and delay payments with this option. The borrow gives the seller a deposit which is applied to the purchase and makes monthly rental payments. This option is attractive to buyers who are not in a position to commit to a property at a particular time and to sellers who want to keep their home occupied and receive rental income after they have moved out.
  
• Installment Contract: Buyers and sellers work out a contract which states a down payment, interest rate and term. This can be long-term or short-term with balloon payments.
  
• Second Mortgages: A second mortgage is used when a buyer needs additional financing to purchase a home. These may be financed by the seller, another lender, relative or investor, with terms agreed upon between the buyer and lender.
  
• Equity Financing: This plan allows buyers to buy a new home by borrowing against a portion of the equity in their present home. A six-month "bridge" is secured on which no monthly payments are required and that money is used to purchase the new home. When the present home is sold, the loan is paid off with the proceeds of the sale. If the home doesn't sell within six months, the owner can renew the loan or seek other options.

     The staff of 1First Realty GMAC Real Estate stay current with today's financing options and can discuss them with you. Their friendly services can assist you whether you are buying or selling a home in southeast Missouri. Contact them for details about the real estate services they can provide. Call them at 573-472-0012 or visit their office in Sikeston, Missouri.

For Sellers
Pricing Your Home :: Selling Tips :: Gather the Facts

For Buyers
The Decision to Buy :: Financing Options :: Home Buying Checklist