Serving Baton Rouge & Surrounding Areas
Stacy Branyan, Realtor
Rural Development (RD) Loans- This program assists approved lenders in providing low- and moderate-income households the opportunity to own adequate, modest, decent, safe and sanitary dwellings as their primary residence in eligible rural areas. Eligible applicants may build, rehabilitate, improve or relocate a dwelling. This loan is backed by the Department of Agriculture. Rural areas are defined by the USDA, which includes some parts of Baton Rouge and many of its suburbs. Contrary to its name, this is not a farm loan. 100% financing is available and the interest rates are comparable to FHA and VA loans. This loan does have property condition requirements.
Federal Housing Administration (FHA) Loans- FHA loans are made by private lending institutions such as banks, savings & loans, or mortgage companies to eligible borrowers for the purchase of a home. FHA loans are designed for borrowers who are unable to make a large down payment. They allow the borrower to borrow up to 96.5% of the value of the home. The 3.5% down payment requirement can come from a gift or a grant, which makes FHA loans popular with first-time buyers. If the loan is approved, FHA will insure a portion of the loan's value to the lender. This loan does have property condition requirements.
Veterans Administraton (VA) Guaranteed Loans- VA home loans are available to qualified veterans and their spouses. Private lending institutions issue the loans which are in turn guaranteed by the Veteran's Administration. The backing provided by the VA allows veterans who would not normally qualify for a mortgage loan due to credit or other issues to purchase a home. The VA does not require any down payment on VA loans and allows the borrower to receive a competitive, fixed interest rate. This loan does have property condition requirements.
Adustable Rate Loans (ARMS) - Also known as variable-rate loans, these often offer a teaser rate for the initial period of the loan. This introductory interest rate is usually lower than rates offered for fixed rate mortgages. The interest rate will fluctuate over the life of the loan based on market conditions. Changes in rate happen at certain time periods, and the lender can set both a maximum and minimum on the rate of fluctuation. Deciding if an ARM is right for you depends on the length of time you plan to own your home and assessing your financial future. If you plan to live in your new home for many years, an ARM might not be the best choice due to the possibility of an increasing interest rate and increasing monthly payments. If you are purchasing a home as an investment or plan to live in the home a short period of time, an ARM can give you a lower interest rate and lower payments.
Fixed Rate (Conventional) Loan - These loans are usually structured with repayment terms of 15, 20, or 30 years. The lender will agree to charge a fixed interest rate over the life of the loan. With this loan type, your monthly mortgage payments will remain the same for the length of the loan.A conventional mortgage is offered by a bank and is not insured by the federal government. This makes it a slightly higher risk for the bank, so the qualifications are stricter. For example, it may require a higher down payment or a lower debt to income ratio. Like other types of mortgages, the interest rate that you pay is based on the prime mortgage rate and your credit score.
Considering purchasing a new home in the Baton Rouge area, but find the loan process confusing? There are many types of home loans available and having a clear understanding of each type will help you be better able to choose the loan that is right for you. I am here to help you explore your options. Below is a brief description of the most common home loans utilized today. Need help connecting with a lender? I have access to many lending resources and can guide you through the financial part of buying a home.