Known as the “Gateway to the Sierras” and Fresno’s next door neighbor, the city of Clovis, CA boasts a multitude of attractive features. From a quaint historic district to a diverse local economy to a variety of fantastic shops, restaurants and other attractions, Clovis has plenty to offer its residents and visitors alike. If you’re considering buying a home in this city, you’ll be happy to know that Clovis’ home values have held fairly steady over the last several years – even growing by 4.1% in the past year! And with the median rent at more than $1,400 per month, owning can certainly be more affordable than renting in this particular part of the state.
What Mortgage Options are Available?
In today’s marketplace, there are several possibilities for Clovis home buyers. From conventional fixed rate mortgages to government-backed loans to jumbo financing and more, there’s likely a home loan program that will work for your needs and budget. Rather than overwhelm you with the many options, let’s focus on some of the most popular loans for buyers in the Clovis area. If you don’t see something that will work for you here, keep in mind this is only a partial list of home financing opportunities. Talk to one of our home loan consultants for information on our entire selection of mortgage options.
Defined as home loans that are not guaranteed or insured by any government agency (such as FHA or USDA, etc.), conventional mortgages are typically (but not always) fixed in its rates and terms. For example, a common conventional mortgage is the 30 year fixed rate loan, which offers a long amortization (repayment) period to help keep payments low. Furthermore, it offers the security of a fixed interest rate, meaning the rate will never change and there is no risk of it ever increasing over time.
Conventional mortgages have to adhere to Fannie Mae guidelines. Fannie Mae, or Federal National Mortgage Association, is a corporation created by the federal government that buys and sells conventional mortgages. Fannie Mae sets the “rules” for conventional mortgages, namely the maximum loan amount and eligibility requirements for borrowers.
To learn more about conventional fixed rate mortgages, click here.
Unlike conventional mortgages, government loans are guaranteed by the U.S. government. The most common examples of government mortgages are USDA, FHA and VA loans. These loans are backed by the federal government; however, they are provided to borrowers through lending institutions like banks and mortgage companies. The government does not lend the money to the borrower, as commonly misconceived.
Backed by the U.S. Department of Agriculture, USDA loans offer borrowers the chance to get up to 100% financing (i.e. no money down) on eligible property. In order for a property to be eligible for USDA financing, it must be located in an area the USDA has deemed “rural.” The reasoning behind this is that the USDA program is designed to help boost homeownership in less-developed areas. You can check to see if an area is eligible for USDA financing by looking at the USDA’s Property Eligibility Map.
With USDA loans, borrowers also have to meet certain requirements, including very specific income limits. Unlike many other typical mortgages, it is possible to earn too much money to qualify for a USDA loan. Check with one of our lending consultants to find out if you meet the necessary USDA income guidelines.
Backed by the Federal Housing Administration, FHA loans aim to make homeownership more easily accessible to first time home buyers, home buyers on a budget, or anyone for that matter. FHA loans feature a significantly low minimum down payment requirement (currently 3.5%). With most conventional financing, a down payment of 20% or more is typically required. Sometimes borrowers can get approved for a conventional mortgage even with less than 20% down, but they must pay costly private mortgage insurance (PMI) to make up for the smaller down payment.
With an FHA loan, the borrower can make the minimum down payment and be free from paying conventional PMI. FHA borrowers do however have to pay two types of mortgage insurance premiums (one up front and one annual). The upfront mortgage insurance premium for FHA loans is currently 1.75% of the loan amount and is typically financed into the loan amount. The annual mortgage insurance premium for FHA loans can vary, but the typical fee is 0.85% of the borrowed amount.
As for conventional PMI, the costs can vary based on your loan-to-value ratio; however, typical costs are between $30-$70 per month for every $100,000 borrowed.
If you’re considering an FHA loan, be sure to crunch the numbers and compare the FHA’s rates and terms with those of conventional mortgages and other options.
VA loans are backed by the U.S. Department of Veterans Affairs. Available only to eligible military service people, military veterans, or surviving spouses of veterans, the VA loan is a low cost home financing solution for the brave men and women who have defended our country and served the people of our nation. VA loans offer up to 100% financing, fixed interest rates and a one-time funding fee (no PMI). The funding fee is set in place to help the program fund itself rather than rely on taxing the American people. The cost of the funding fee is relatively small, but it can vary based on factors such as down payment amount, first or subsequent use, and whether the borrower is a veteran or Reservist/National Guard member. To view a breakdown of the funding fee costs, click here.
If you’re a Clovis resident, or soon-to-be resident, and you would like to know more about these programs, please give us a call: (800) 564-4342. We’ll be happy to review your information, talk to you about your options and provide you with a free mortgage rate quote.