You want to purchase a Jersey Shore home.  Smart Buyers get their financing together before they even start looking for a property.  After all, you’re going to want an approval letter ready to go when you make an offer.  FHA.  VA.  Conventional.  Adjustable rate.  Fixed rate.  How do you know which Jersey Shore mortgage loans work best for you?  I’ve provided a bit of a primer below to help you navigate these terms and narrow down your choice.

Adjustable rate, fixed rate. FHA, VA or conventional. When it comes to Jersey Shore mortgage loans, which one works best for you?

Jersey Shore Mortgage Loans

Government-Backed Loans

Search homes for sale at the Jersey ShoreDon’t have a large down payment?  Is your FICO score only “so-so”?  Did you previously serve or are you currently serving your country in the armed forces?  Are you a first-time Buyer (haven’t owned a home in the last three years)?  The Jersey Shore mortgage loans you might want to consider are FHA or VA loans.  FHA loans tend to be popular with first-time home buyers.  You can purchase a home with as little as 3.5% down as long as your credit score is at least 580.  If it’s a little lower, you may have to put 10% of the purchase price down.  The down side of not putting 20% down is that you still have to pay mortgage insurance (PMI).

VA loans serve those who served/are serving our country.  Whether you served in the military in the past, actively do so today or are a military family, you may qualify for a VA loan.  Qualifying applicants forgo any down payment and never pay mortgage insurance.  You’ve definitely earned it.  If you fit the criteria, this is your best bet.  Several restrictions on the type of home you can buy come into play with a VA loan.  So, talk with your mortgage broker to find out what they are before you start looking at Jersey Shore homes.

Conventional Loans

Unlike FHA or VA loans, conventional loans are not backed by the government.  Most Buyers choose these Jersey Shore mortgage loans because they offer better interest rates and terms.  This translates into a lower payment.  To qualify, you must have good credit (at least 620 FICO).  Also, you need to show a stable income.  This includes a stable work history (at least two years at your current job is preferable) as well as lower debt-to-income ratio.  When it comes to your mortgage payment, it should not exceed 28% of your gross monthly household income.  That includes taxes and interest.  Your overall debt (new mortgage payment, taxes, insurance, auto loans, credit cards, student loans, etc.) should not exceed 36% of your gross monthly household income to be considered desirable as a conventional loan applicant by the mortgage company.

Adjustable Rate (ARM) vs Fixed Rate Mortgages

When it comes to the rates for Jersey Shore mortgage loans, there are two choices: adjustable and fixed rate.  With fixed rate loans, your interest rate stays the same for the life of the loan.  It doesn’t matter whether you have a 10, 15 or 30 year mortgage, the rate remains the same throughout.  Adjustable rate loans fluctuate.  Initially, an ARM tends to be lower than fixed rate loans.  That can help make the transition into home ownership a little easier for some.  However, it can change from year to year, depending on which ARM you choose.  Talk to your mortgage broker or financial adviser to determine which works best for you.

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Sherri Lilienfeld, Helping You Live Your Jersey Shore Dream