Mortgages for Moving: Home Loans and Conventional Home Loans Explained

Moving to a new home is an exciting yet stressful experience. One of the most critical aspects of this transition is securing the best mortgage to finance your new home. Understanding the various home loan options, including conventional home loans and other mortgage types, can make the process smoother and more manageable. Here’s a comprehensive guide to using a mortgage to buy a home during a move.

Understanding Home Loans

Home loans are financial instruments that allow individuals to purchase a home without paying the full amount upfront. Instead, the lender provides the funds to buy the home, and the borrower repays the loan over time, typically in monthly installments that include both principal and interest.

Types of Mortgages

There are several types of mortgages available to homebuyers. The two primary categories are conventional home loans and government-backed loans.

1. Conventional Home Loans:

Conventional Home Loans are not insured or guaranteed by the federal government and are offered by private lenders such as banks, credit unions, and mortgage companies. Conventional home loans can be conforming (meeting the guidelines set by Fannie Mae and Freddie Mac) or non-conforming (jumbo loans that exceed these limits).

2. Government-Backed Loans:

These include FHA loans (insured by the Federal Housing Administration), VA loans (guaranteed by the Department of Veterans Affairs), and USDA loans (offered by the United States Department of Agriculture for rural properties). Each of these has specific eligibility requirements and benefits.

Advantages of Conventional Home Loans

  • Flexible Terms: Conventional home loans offer various term lengths, typically ranging from 10 to 30 years, giving borrowers flexibility in choosing a repayment schedule that fits their financial situation.
  • Competitive Interest Rates: With good credit, borrowers can secure competitive interest rates on conventional mortgages, potentially saving thousands over the life of the loan.
  • No Mortgage Insurance with 20% Down: Unlike FHA loans, conventional home loans do not require private mortgage insurance (PMI) if you make a down payment of at least 20%.

Steps to Secure a Mortgage During a Move

While it may seem daunting at first, getting a mortgage for your big move is much simpler than you might think. Here are the steps to secure a mortgage:

1. Assess Your Financial Situation:

Before starting the home-buying process, evaluate your financial health. Check your credit score, calculate your debt-to-income ratio, and ensure you have enough savings for a down payment and closing costs.

2. Get Pre-Approved:

Obtain a mortgage pre-approval from a trusted lender like Academy Bank. This involves providing your financial information, such as income, assets, and debts, to determine how much you can borrow. A pre-approval letter shows sellers that you are a serious buyer.

3. Choose the Best Loan:

Decide whether a conventional home loan or another type of mortgage is the best fit for your needs. Consider factors like interest rates, down payment requirements, and loan terms. Compare Academy Bank’s mortgage options to see which is right for you.

4. Find a Home:

Work with a real estate agent to find a home that meets your needs and fits within your budget. Keep in mind the costs associated with moving and any potential renovations or repairs the new home might need.

5. Complete the Loan Application:

Once you've found a home, complete the mortgage application process. This involves submitting detailed financial documentation and undergoing a home appraisal and inspection.

6. Close the Loan:

After your loan is approved, you'll go through the closing process, which includes signing the final paperwork and paying closing costs. Once this is completed, you'll receive the keys to your new home.

Tips for a Smooth Move

  • Plan Ahead: Start the home-buying process as early as possible to give yourself plenty of time to handle any unexpected issues.
  • Stay Organized: Keep all important documents, such as your pre-approval letter, loan application, and financial records, in one place for easy access.
  • Communicate Clearly: Maintain open lines of communication with your lender, real estate agent, and moving company to ensure everyone is on the same page.
  • Budget for Moving Costs: Factor in the costs of moving, including hiring movers, renting a truck, and any temporary housing or storage needs.

Securing a mortgage, whether a conventional home loan or another type, is a crucial step in the home-buying process, especially during a move. By understanding your options and following a structured plan, you can navigate this transition smoothly and confidently. With the right mortgage, you can make your new house a home and enjoy the exciting new chapter in your life. Reach out to one of Academy Bank’s loan officers to learn how we make the process easy.

Member FDIC

Subject to credit approval. Qualification guidelines and restrictions apply with each loan product. Fees apply.