Financing seems to be the most asked about topic among all of my clients, both buyers and sellers, so I wanted to put together a comprehensive, in-depth list describing the 7 most popular methods used to purchase real estate. I’ve also included some local lenders I have worked with, and their own contact information, that you can call to get a pre-qualification and discuss the methods that will work best for you.
Financing your Treasure Coast Real Estate:
- Cash - while about a quarter of investors in the US finance their deals with cash, it is obviously not a viable option for most people looking to purchase a home. While actual cash is never exchanged (title companies usually use cashier’s checks and electronic wires), there is no mortgage needed for the buyer to purchase.
- Conventional Mortgage - the most common type of mortgage used by home buyers and investors alike, the conventional mortgage can be either conforming or non-conforming depending on its adherence to government loan limits, and includes various programs such as adjustable-rate, interest-only, hybrid, and balloon mortgages. You do not have to put down 20% for a conventional loan, talk to one of the lenders below to get more information on following the guidelines of a conventional loan.
- FHA Loan - these are loans that are insured by the Federal Housing Administration (FHA) and are designed for homeowners who will occupy the property. While the program does provide incentives such as low down payment (currently 3.5%), this lack of initial equity could lead to the requirement of Private Mortgage Insurance (PMI) that would increase the monthly payment until the purchaser got to 20% equity.
- VA Loan - available for military veterans and active military members, Veterans Affairs (VA) mortgages do not have a minimum credit score requirement and can often finance the entire loan without the need for a down payment. The loans are made through private lenders and partially guaranteed by the VA so long as their guidelines are met.
- FHA 203k - this FHA sub-set allows for increased loan amount to finance repairs or improvements to the property being purchased. While this product sounds great in theory, many buyers get fed up with the paperwork and delays that can be substantial.
- Hard or Private Money - hard money is obtained by private individuals or businesses that lend short-term, high-interest financing for the sole purpose of real estate investment. Similarly, private money is usually not from a professional, but an individual who is looking for higher returns with their money than they would get elsewhere.
- Home Equity Loans and Lines of Credit (HELOC) - Using equity in current properties to finance the purchase of other homes or investments is viable for those looking to roll their equity into newer projects. If you have been able to boost your treasure coast home value, you can benefit off of your added equity and take a loan out through that increase.