As a leader in the homebuilding industry, Dream Finders Homes wants to be a resource for you throughout your homebuying process. We understand that you have many reasons why you’re looking for a new home. We don’t want the current market conditions to hold you back from one of the greatest purchases you’ll make. So, we’ve worked hard to come up with great home financing options.
Act Now to Take Advantage of Our 2-1 Buydown!
What’s a 2-1 Buydown?
Temporary buydown programs offer a reduced mortgage rate for a set amount of time, which can help to lower the initial payments of a loan. After the temporary buydown period has ended, the mortgage returns to its original rate. Unlike an Adjustable-Rate Mortgage (ARM), a temporary buydown provides certainty for the current and future interest rates.
A 2-1 buydown allows borrowers to enjoy reduced interest rates for the first two years of their mortgage. The interest rate drops by two percent in the first year, one percent in the second year, and then returns to the full interest rate by the third year. (Borrowers must be able to afford the monthly mortgage payments after the interest rate returns to its original rate.)
Buydowns allow borrowers to more easily qualify for mortgages with a lower interest rate.
Example of a 2-1 Buydown: A buyer qualifies for a 30-year mortgage at five percent and the seller is offering a 2-1 buydown. The interest rate would be three percent for the first year and four percent for the second. At the start of the third year, the interest rate on the loan would return to the original five percent.
3 Types of Loans to Help Your Home Financing
A variety of home financing options are available with your new Dream Finders home. Depending on your financial situation, you’ll have several different possibilities. Here’s an overview of the types of loans available.
Conventional Loan vs. FHA Loan vs. VA Loan
A Conventional Loan is the most common type of mortgage loan. It is originated, backed and serviced by a private mortgage lender like a bank, credit union or other financial institution. Conventional loans may be conforming and nonconforming loans, depending on whether or not they conform to guidelines set by Fannie Mae and Freddie Mac. It’s possible to get approved for a conforming conventional loan with a credit score as low as 620, although some lenders may look for a score of 660 or better. And if you don’t put down 20% or more, most lenders typically require you to pay private mortgage insurance. Conventional loans are typically repaid over a 30-year term, but it’s possible to qualify for a 15- or 20-year conventional mortgage loan.
An FHA Loan is a loan insured by the Federal Housing Administration. That means if the buyer fails to repay the loan, the federal government pays the lender for any losses. Because of the government’s insurance, lenders require a lower down payment than with a conventional loan. You may qualify for an FHA loan if you have debt or a lower credit score. You might even be able to get an FHA loan with a bankruptcy or other financial issue on your record. But you’ll also have to pay mortgage insurance. The option of a lower down payment or looser credit requirement makes FHA loans particularly attractive for first-time home buyers who may not have an extensive credit record.
A VA Loan is a special type of loan backed by the government and only available to active duty service members and their families, and veterans of the US military and their surviving relatives. VA loans are partially backed by the Department of Veterans Affairs (VA) and are issued by private lenders. The down payment required is usually 1-3% of the total loan amount, and the interest rates are generally lower relative to conventional loans. You may even be able to make it with no down payment. There may not be an upfront fee at closing, and monthly mortgage insurance premiums aren’t required.
Connect with Dream Finders to Learn How We Can Be Your Home Financing Partner!
Because of the unpredictable nature of the real estate market, the best time to buy is when you are ready. (Ready means that you have all your ducks in a row, financially speaking. Any potential homebuyer who wants to work with Dream Finders Homes must have preapproval before contract.)
If you are considering a move, with the financial means to do so, now is a great time to buy. (There is no guarantee that tomorrow, next month, or next year will be a better time to buy than today.)
When you are ready to buy, we are ready to build! Contact us today to learn more about our financing options and move into the home of your dreams sooner than you ever expected.