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A Quick Mortgage Loan Breakdown

A Quick Mortgage Loan Breakdown

Approved Mortgage application form with a calculator, pen and glasses

The importance of being pre-approved for a loan cannot be understated. In today’s market, it’s helpful to know your price range to save time, for flexibility and it makes purchasing a property easier by showing the seller you are serious and can afford the purchase.

Being pre-approved for a mortgage means that a financial institution has researched your credit history and decided you would be a good candidate for a mortgage. A pre-qualification simply means that a lender looks at your overall income, assets and debts to give you an idea of how much money you can borrow. This is mainly informational and can be beneficial to those who have very little credit or credit that needs improvement. This will start the ball rolling and give you the power you need to either build your credit or continue with the home buying process. The pre-approval process takes time, and begins before you begin your search for a home, but will benefit you greatly in the long run.

But where do you start? How do you know which loan options will be right for you based on your needs? Here’s a quick breakdown of the most common loans to assist you in your decision making process. Also, please don’t forget to utilize our Resources page for a list of Orr Land Company’s trusted vendors, feel free to visit your local bank, or ask friends & family for recommendations based on their knowledge and experiences!

Conventional Loans (Freddie Mac & Fannie Mae)
  • High loan to value ratio
  • More monthly financing options available
  • Typically for clients with good credit scores
  • Used for all occupancy types
  • Used for Purchases, Refinancing and Renovations
  • There are 10-30 year fixed loan terms
  • There are 5, 7 & 10 year arm loan options
  • Available for 1-4 units
FHA Loans (Federal Housing Administration)
  • High loan to value ratio
  • Typically have low monthly payments
  • There is an option for clients with lower credit scores
  • Typically easy to qualify for this type of loan
  • Used for Purchases, Refinancing and Renovations
  • There are 15 & 30 year fixed loan terms
  • There is a 5 year adjustable rate
  • Available for 1-4 units
USDA Rural Housing Loans (United States Department of Agriculture)
  • Typically at a 102.5% loan to value ratio
  • Offers a $0 down payment to clients
  • Typically have low monthly payments
  • Typically for clients with good credit scores
  • Loan is limited specifically to rural areas
  • Used for Purchases and Refinancing
  • Offered at 30 year fixed loan terms
  • Available for 1 unit only
VA Loans (United States Department of Veteran Affairs)
  • Offers a $0 down payment to United States Veterans, Active Duty Military, and Service Members
  • Typically have low monthly payments
  • Loan is limited only to eligible veterans
  • Does not require monthly mortgage insurance
  • Used for Purchases, Refinancing and Assumptions
  • There are 15 & 30 year fixed loan terms
  • There is a 5 year adjustable rate
  • Available for 1-4 units
There are many loan options out there and the loan that is right for you will depend on many factors including type of property you are seeking, your credit score, length of the term you can afford, as well as military status, and more. You may choose any institution you would like to go through, or ask around and see if your friends, family or a trusted real estate agent have resources for a good lender.


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