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CJ Davies
REALTOR®, ABR
(609) 713-8952
Broker / Sales Person
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Types of financing and which one is right for you?

 

**This page is under construction**

 

Cash Financing

The Deal: This simply means that there is no outside financing and the buyer is paying one or a series of checks directly from a bank account.

 

The Good: The ability for a quick close and the lack of regulations and risks to the seller that make cash deals appealing.  With a cash deal, there are no lender regulations. The lack of a lender means that there is no under writing process, there is less paper work and cash closings generally can close much quicker than a deal that is finaced through a  lender.  With cash, it is easier to overcome home inspection issues, CO issues and in general, there is less risk to the seller because there are less potential issues that could cause a deal to fall apart during the process. 

The Bad: Not everyone has the ability to purchase a home with cash.  If a seller is looking strictly for a cash buyer, they will severly limit their pool of potential buyers.  Since cash buyers are normally well aware of the benefits of a cash deal and the scarcity of cash buyers, they generally aim to negotiate a lower price to reflect that. 

Read more details about cash financing HERE

 

Conventional Financing

The Deal:  Conventional financing is the most common type of financing.  It is straight from your bank with no government backing or regualtions.  Conventional loans can range from 5%-20% + down requirements.

 

The Good:  Conventional loans tend to have very good terms and interest rates because of the required amount down and the lack of regualtions from the government.  The more qualified you are as a buyer (Higher down payment, High credit ccore, low debt - income ratio) the better your interest rate.  

 

The Bad: Since the interest rates are directly correlated to your down payment and qualifications, you must have larger amounts of cash and have good credit.  If you are struggling with your credit or don't want to tie up all of your cash in a transaction, conventional loans might not be for you.

 

Read more about Conventional Financing HERE

 

FHA Loans 

The Deal: FHA loans are mortgages that are backed by the Government, specifically the Federal Housing Administration.  This takes some of the risk off of the lender and allows them to be more flexible on the down payment and FICO score requirements.  FHA loans can require as little as 3.5%

 

The Good: As stated above, since the loan is backed by the Federal Government, it allows the mortgage conmoany to be less strict on down payment and FICO score requirements.  If you do not have much cash or are having some trouble with your credit, an FHA loan might be perfect for you.  Borrowers with credit scores of as low as 500 can qualify.  

 

The Bad:  Since these mortgages are backed by the Federal Government, there are strict guidelines that need to be followed.  The condition of the house is inspected and scrutinized.  If a home is in poor condition, it will be extremley hard to qualify for a FHA.  Read more about FHA Construction Loans HERE.  Mortgage Insurance (MIP or PMI)  is required on all FHA loans.  This is an additional monthly charge based on the borrowers Loan to Value ratio (LTV) and other aspects of the loan.

 

Read more about FHA Loans HERE

USDA Loans

 

The Deal:  A USDA loan is a zero% down mortgage option for buyers in rural and suburban areas.  It is designed to "improve the economy and quality of life in rural America.

 

The Good: It allows borrowers who are not wealthy or cannot get a traditional mortgage the opportunity to purchase a home a a good interest rate even without putting money down.  The USDA backs the mortgages, similar to FHA and VA financing which allows lenders to 

The Bad:  This product has restrictions on income and more importantly location.  You have to make sure that the homes you are interested in are in a USDA qualified area.  Metropolitan areas are normally not included in the coverage area.  Mortgage insurance is required with this product.

 

Read more about USDA Loans HERE

 

VA Loans

 

The Deal:  Thank you to every one of our Veterans.  Your service is invaluable to our business, our clients and our Country. VA loans are available to our service members in order to provide a zero down product that can allow for some hiccups in the credit if needed.

 

The Good:  Rewarding the people who serve and protect our Country is a no-brainer.  Nobody deserves it more.  The Loan is backed by the U.S. Department of Veterans affairs so that private lenders can provide loans to service members at great interest rates with 0%Down.  With the Down payment requirement and the availability of negotiating seller concessions towards closing costs, Vets can potentially be in a beautiful home with almost $0 down.  Awesome!

 

The Bad: There is almost nothing bad about serving our country and being rewarded for it.  My personal caution while dealing with VA loans (as well as USDA loans) is this.  Be careful of over leveraging!  It is great to be able to buy a home with 0% down, but remeber, it will cost you about 7% to re-sell the property when you decide to.  If you buy a home for $200,000 at 0% down and decide to sell in 3 years, you will have to sell your home for approx 210,000 top break even.   Make sure you have a good real estate agent to help you purchase at a good price!

 

Read more about VA Loans HERE

 

Renovation Financing 

 

Adjustable Rate Mortgages

 

Private Money Lenders

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Disclaimer: All information deemed reliable but not guaranteed. All properties are subject to prior sale, change or withdrawal. Neither listing broker(s) or information provider(s) shall be responsible for any typographical errors, misinformation, misprints and shall be held totally harmless. Listing(s) information is provided for consumers personal, non-commercial use and may not be used for any purpose other than to identify prospective properties consumers may be interested in purchasing. Information on this site was last updated 02/04/2023. The listing information on this page last changed on 02/04/2023. The data relating to real estate for sale on this website comes in part from the Internet Data Exchange program of Ocean County MLS (last updated Thu 09/12/2019 11:22:12 AM EST) or Bright MLS (last updated Sat 02/04/2023 6:45:18 AM EST). Real estate listings held by brokerage firms other than Davies & DeGennaro may be marked with the Internet Data Exchange logo and detailed information about those properties will include the name of the listing broker(s) when required by the MLS. All rights reserved. --

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