Financing Options

"YOU CAN GET A RATE IN THE 3% RANGE***"
"NO CLOSING COSTS***"
"WE CAN FINANCE ANYONE***"
"100% FINANCING WITH NO MONEY DOWN***"

You have heard these ads before - whether you're driving in car listening to the radio or watching TV in your home; but what do they really mean? Do they apply to everyone? And what do the ***'s really mean? Some of the statements like these listed above are true, but not for everyone, so you need to be cautious and read the fine-print. There are many types of mortgages available to new home buyers, but the question is.....

"Which loan is right for you?".

BAY HOMES works with several lenders that each specialize in different types of home loans for new construction homes. Not all lenders are experts in every type of loan, so we've assembled a great team of financing experts to meet your needs.

A New Home Loan Pre-Approval is necessary, prior to selecting a lot, designing a home, or buying an existing home. Without the pre-approval, neither you or the builder can know how much monthly payment you will be comfortable with. Once the pre-approval has been done, you will know your estimated monthly payment and how much money you can expect to put down on the house (if any).

There are four basic types of loans that you will learn about. Our lender partners will explain each one to you and help you decide what is best for you. Below is a quick overview of the different types of loans and what they mean to you:

CONVENTIONAL LOANS
Most commonly referred to as a "Bank Loan". These loans are offered by banks and credit unions. A conventional loan requires a minimum down payment of 5% of the home price. It is usually the best loan option if you have 20% or more to put down. The reason for this is because there is mortgage insurance on any conventional loan with less than 20% down. Mortgage insurance is an additional monthly premium that is charged to you, the borrower, to pay for a mortgage policy that covers a percentage of the purchase price - for the lenders' benefit. A minimum credit score of 680 is required for this loan.

FHA LOANS (Governnment Loans)
Probably the most common loan for "First-Time Homebuyers". The FHA loan requires a 3.5% down payment. It also has mortgage insurance requirements, but the monthly mortgage insurance rates are generally much lower than conventional loans. FHA loans require a minimum credit score of 620. In some instances, FHA will underwrite a loan when an applicant has NO credit score. FHA is also somewhat forgiving if there are unpaid collection accounts.

USDA LOANS (U.S. Department of Agriculture)
YES! You read that right. The USDA offers and underwrites loans in "rural" areas. Most of the MS coast (Hancock, Jackson and part of Harrison counties) are considered rural. Minimum credit scores do apply for this type of loan, but the big benefits are low interest rates, no mortgage insurance and 100% financing. The USDA loan is not always available, as the other types are, so we urge caution, as the USDA allots funds on an infrequent basis.

V.A. LOANS (Dept. of Veteran Affairs)
The V.A. offers home loans to Veterans in good standing, both active and retired status. If you are a Veteran, this might be the right loan for you because it offers 100% financing and no mortgage insurance. Credit scores do apply and follow similar guidelines to FHA loans.