Identifying loan programs and negotiating a sales contract are common steps that you must go through as you buy a house. The decision you make about the loan program could be with you for a very long time, so you need to be sure that you get the right program. Additionally, your loan program choices also require close examination of the property type and condition as these can impact the type of loan you get. Some programs like VA loans and FHA mortgages are tougher on unfinished homes while at the same time have programs to lend on finishing the unfinished sections. You will need to be prepared to negotiate in some instances to get the seller to help make property improvements before you get the home, or you could be stuck with backing out of a contract if you haven’t planned for property condition contingencies.
When it comes to loan programs, one of the first decisions you’ll have to make is to whether you should get a 30 year mortgage or a 15 year mortgage. Often, this question will boil down to a mere matter of what do you qualify for based on the house you are purchasing. It doesn’t matter whether you are buying a home using a VA loan, an FHA mortgage or a Conventional home loan the same decision awaits you. It also doesn’t matter whether you are using your VA loan qualification to take advantage of low va rates, or you are getting an FHA mortgage which also has very competitive rates – the same decision awaits you when it comes to getting either a 30 year or a 15 year mortgage.
One of the most commonly used arguments for getting a shorter term mortgage is that you save money because you pay less finance charges (mortgage interest). While this is great financial advice, it might not be the most fiscally responsible suggestion out there. What happens in the case of a shorter term mortgage is that you will have a much higher mortgage payment than you would with a longer term. With all the uncertainty in the economy only you can answer for yourself is it worth the risk to take a higher payment that will be much harder to keep current if you should suddenly run into some sort of financial hardship.
Instead of boxing yourself into a higher payment you might opt for a lower payment through a 30 year mortgage term and voluntarily make a higher payment.