Pressed for Space: Exploring non-traditional mortgage options

Emily Moessner

Mon, Aug 5, 2024, 7:48 PM 4 min read

HUNTSVILLE, Ala. (WHNT) — The population in Huntsville and Madison County is growing by the day, and News 19 is helping you “find your space” in the Rocket City.

Of course, for people who are looking to buy a home, finding the right financing option for you can be tricky. Interestingly, many buyers in Huntsville are already utilizing alternatives to the traditional bank loan.

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Amy Henry, a mortgage broker with Bank Independent, says securing a home loan should be the first step in your home purchasing process.

“There’s really nothing that replaces going in and speaking with your mortgage lender and getting pre-qualified, because then you understand more about your situation,” Henry told News 19.

Your down payment, interest rate, credit score and what you can afford as a monthly payment are all vital factors when deciding what type of home loan is best for you.

“All of those things are important for you to know before you go and start looking at a home,” Henry said.

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In Madison County, a little less than half of recent buyers, 914 out of 1994, purchased a home with a conventional loan. According to data from the Huntsville Area Association of Realtors (HAAR) about two-thirds of buyers who didn’t use a conventional loan used either an FHA loan or a VA loan.

Conventional loan: 914
VA loan: 373
Cash: 331
FHA loan: 330
USDA loan: 40

The data shows during Q2 for 2024, 373 buyers used a VA loan.

“It’s been pretty remarkable, it helps Veterans and service members who would not be homeowners otherwise make this dream a reality,” said Chris Birk, the VP of Mortgage Insight for Veterans United.

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Veterans United is a nationwide VA loan lender. Birk says a VA loan can be an attractive option for military and veteran buyers.

“The ability to buy without a down payment remains a huge advantage as home prices continue to rise,” Birk said. “The loans also offer the lowest average interest rate on the market, so that sort of a one-two-punch of no down payment and lower rates has helped to make homeownership more accessible.”

Those factors are what drew in Madison County veteran, Raymond Fernandez.

“One of the main reasons I went with a VA loan is the interest rates are way lower compared to FHA and conventional loans,” Fernandez told News 19.

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He served in the Marine Corps for four years, out of Camp Lejeune.

“Everything I am today is because of the Marine Corps,” he said.

Like many other veterans and military service members, he warned the VA loan benefit through dedicated service to our country.

In May of 2024, he purchased his current home, using a VA loan for the second time. He said it is a process that he recommends to other veterans.

“Use your benefits, you know,” Fernandez said.

He said people can find most of the information they need with a quick internet search.

“Information isn’t that hard to find, it’s all online,” he said.

Information is key when it comes to VA loans.

Chris Birk with Veterans United told News 19 that according to a recent study, 75% of veterans have questions or believe misconceptions about the VA loan process.

He said one of the biggest misconceptions surrounding VA loans is how many times a veteran can utilize it.

Birk said it isn’t limited to a one-time use.

“You can use this benefit over and over again,” he said. “Once you earn the VA loan it’s yours for life.”

While Madison County does have a large military and veteran population, not all home buyers are eligible for a VA loan and therefore need to explore other options.

“The job market here is still very strong, and that is producing buyers and opportunity,” said Anthony Jones, a Huntsville-area real estate agent.

Jones said a large number of highly educated and employed buyers are flocking to the region. He said each buyer presents a different challenge and list of needs.

“What I like to look at for my clients, is really understanding who you are as a client,” Jones said. “What are your hurdles?”

For buyers who may have a lower credit score, an FHA loan is another option.

According to Nerd Wallet, a personal finance company that specializes in loans and mortgages, an FHA loan can be a good fit for first-time home buyers or people with little savings.

However, unlike conventional loans, FHA loans do require mortgage insurance payments with generally last for 11 years or the life of the loan.

Regardless of which option you choose, it is important to do your research and explore your options.

“There’s a lot if resources out there,” Henry said.

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