First Time Home Buyers Episode 4: Conventional and VA Loans

– Hi, it's Amy Clarkson with Clarkson Premier Team at Magnolia Realty and I'm here with my good friend Eric Schroeder with Prime Lending today And Eric I'm going to ask you a couple questions about a couple of loan options for first time home buyers

– Okay, great Absolutely – The first one is VA, tell me why it would be so great to get a VA loan for a first time home buyer – Yes So, a veteran has the ability to purchase a house without putting any money down

– Oh, wow – So that is a 100% financed loan VA also, they are not going to charge a monthly mortgage insurance on that loan – Okay, so it's more cost effective if you were a one time veteran, correct? – Correct, that's right – Is there any kind, beside being a veteran, is there any other requirements to get a VA loan? – Well the good thing about the VA loan is the credit score, on conventional loans a lot of loan products you get hit on the interest rate when you FICO score drops below 740 or 700

– Right – A VA loan will let you get down to a 620 FICO score – Okay, cool So it helps veterans out a little bit – It does, absolutely

– Okay, awesome – What about a conventional loan for a first time home buyer? How would that be beneficial for them? – Yes, so a conventional recently, I would say within the past three years or so, conventional came out with three percent loan products And the thing is with a first time home buyer is they may not have established the credit to go conventional So conventional they really like the credit scores at maybe 740, 720 when you get below a 700 you're probably going to be taking buyer out of that tier or that type of loan – Right

– And maybe look at maybe an FHA or USDA But conventional, if you have the credit score where you're not going to get hit on that interest rate, then you have lower mortgage insurance, and then when you get to the 80% that mortgage insurance is going to drop off – Right – Where some of the other products it will not – Right, so that's good if you have the good credit score, and you've got a little bit of money saved for a down payment, conventional loan might be a great way to go for a first time home buyer

– Yes, correct – Because of their options down the road – Absolutely, yes ma'am – Fantastic, okay – Is there anything else you can think of that a first time home buyer might need to know about those two loan products? – I would say on the VA, if you have disability, I believe it's 30% on VA if you have that disability then you have that funding fee, there's a funding fee that the VA loan charges the veteran, it's like two and a quarter the first time you use it

And it's like 33% the second time or every consecutive time you use it Now that funding fee can be expensive and that may be a deterrent for a veteran initially But that is rolled into the loan – Oh, okay

But if you have the disability, you may not have to pay that You can be exempt from that funding fee, which if you're exempt that's an incredible thing – Right, awesome Okay, I appreciate you giving us some information about that I know our first time home buyers are curious about the different products out there It just takes a phone call to get a couple questions to you, right? – Absolutely, yes ma'am

– Does it cost anything for them to talk to you about one of those products? – Absolutely not, no ma'am – Will it hurt someone's credit to have a conversation with you about it? – No, even if we pull credit An application is super easy, super fast and it's something we can do over the phone Credit can be pulled immediately, within 20 minutes you can know if you're qualified for a loan A loan officer is going to evaluate you based on your money you can put down, your credit score, debit ratio

All of these loan products come into play And so a good loan officer is going to put you in place for the right loan that's best for you – Awesome, well thank you so much for your time today – Thank you, I appreciate you – Thanks