Sheldon says pre-approved buyers typically focus on purchase price when in most cases it's the monthly payment over time relative to the purchase price that dictates whether or not that particular property can be identified as an opportunity.
He says consumers are beginning to place more emphasis on sustainable payment over time considering they could be paying more for the property than anticipated. And today's real estate market conditions are causing many buyers to switch mortgage loan programs during the pre-approval phase and well into after they've gotten they have gotten into contract.
While qualifying for the mortgage is the end result to perform on a purchase contract Sheldon says the appropriate loan program promoting long-term payments sustainability becomes next critically important piece of the puzzle.
In his blog Sheldon details the following borrowing options:
Conventional loans represent the lowest cost combination of rate and payment over time. This type of financing represents the cream of the crop available in the market today. 20 percent down to avoid monthly mortgage insurance with the lowest possible payment being 3 percent is common.
FHA Loans/Including first-time home buyer options are typically geared towards consumers entering the real estate market for the first time. This type of financing however is eligible for anyone and is not solely a first-time home buyer program.
Fannie Mae's Homepath.com program offers two main advantages those being no appraisal requirement and no monthly mortgage insurance requirement. The cost of these two advantages comes in the form of a higher risk based pricing an inherently higher cost loan.
VA Loans for military families through the US Department of Veterans Affairs guarantees loans for veterans looking to purchase real estate. The program allows for 100 percent financing and no money down and does not contain any monthly mortgage insurance.