Whether you are looking to purchase a home, refinance a mortgage, or upgrade your home, First Trust Credit Union has several home loan options available to help you accomplish the task. These options include a first mortgage, refinanced mortgage, Federal Housing Administration (FHA) Loan, VA (Veterans Affairs) Loan, Home Equity Loan, and Home Equity Line of Credit (HELOC).
The first step in deciding which loan is best for you is to sit down with a consultant to discuss all options and what would work best for your financial situation.
"I usually start with where our member thinks their credit score is, and what they are comfortable with for a down payment," said Mortgage Consultant for First Trust, Lanell Payne.
The first mortgage, also called a lien, is essentially what you would think: the first mortgage on a property. This first mortgage acts as a trust between lenders and borrowers, ensuring that the borrower repays the lender for the loan. This collateral protects the lender’s money, allowing the lender to foreclose and sell the property in the event the borrower does not keep up with payments.
It also safeguards the borrower’s ownership of a property, meaning that the property belongs to the borrower and cannot be sold by the lender as long as the borrower sticks to the payment plan.
When homeowners choose to refinance their first mortgage, that second mortgage is aptly called a refinanced mortgage.
Refinancing a mortgage can move you from an adjustable rate to a fixed rate and cut the length of your mortgage in half. Shortening your mortgage payment plan also helps you reduce interest, which can save you money in the long run.
Low credit score? No problem. FHA loans do not require a stellar credit score, and this easy eligibility and flexibility are one of the most attractive features of the loan.
"Having a lower credit score and lower down payments are the biggest benefits for FHA loans," Payne said.
These loans are not only beneficial to homeowners. They also lower lender risk. In the event that homeowners default on their mortgage, the FHA will intercede, protecting both homeowners and lenders. Like a refinanced mortgage, FHA loans accrue interest through a fixed interest rate so you know exactly how much to pay each time throughout the length (term) of the loan.
In addition, through an FHA loan, homeowners are allowed to have an immediate family member make their down payment, making this an even more affordable option.
The U.S. Department of Veteran Affairs offers a loan similar to an FHA loan that is available to veterans and their spouses. This loan is called the VA loan. The VA loan is paid back at a fixed interest rate like the FHA loan, however, it does not require a down payment.
Veterans and spouses may use the VA loan to purchase new homes and refinance homes, allowing flexibility to suit their financial needs at varying stages of life and homeownership.
Home Equity Loan
If you like the idea of having a fixed interest rate, another loan option that may suit your needs is the home equity loan. Taking out a home equity loan will allow you to borrow the money you need to upgrade your home with a low-interest rate along with refinancing options.
Unlike the FHA and VA loans, you do need a good credit score and a decent amount of equity in your home to qualify. If you meet these criteria, the home equity loan could be the plus you need to tackle those home renovations or repair projects.
Home Equity Line of Credit (HELOC)
If you would prefer a variable interest rate that allows you to borrow only what you need, the HELOC option may be for you. As this is a line of credit, you can think of it as a credit card: you borrow money as needed when needed.
Because HELOC is not repaid with a fixed interest rate like the home equity loan, you can tackle those minor or major upgrades with a more flexible repayment plan.
No matter the type of loan, First Trust Credit Union is here to help with honest and sincere feedback.
"I want our clients to let me know what they would be comfortable with for a mortgage payment, and not just go by what we tell them they are, or could be preapproved for. I always enjoy helping our members get into a home that they love, and I also enjoy the overall satisfaction of helping our members in general," Payne said.
To learn more about the home loans available through First Trust Credit Union, visit https://www.firsttrustcu.com/.