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I love summertime.  It’s not just the whole birds-chirping and flowers blooming thing—it’s also when home sales are traditionally churning merrily.

Okay, so I might sound a little too Mary Poppins-ish there.  Blame my wife and her penchant for Julie Andrews musicals.  But the fact is, historical data shows that home sales traditionally began to heat up in early spring, and deals are still being made in June and July.   And this year, despite a relatively weak economy in many areas, looks to follow that trend, with applications for home purchases continuing to climb according to the Mortgage Bankers Association.

What is changing, however, is the type of loans that folks are choosing.  In fact, if you’re looking to buy a home, odds are that you’re considering a government-insured FHA and VA loan.  In fact, Bloomberg reports that more than one-third of prospective homebuyers are selecting government insured mortgages—the highest number since the early 1990’s.

Why would you, as a prospective homebuyer, choose a government-insured loan over a conventional one?  Well, there are a number of reasons.  First, these government programs usually have lower down payment requirements than their conventional counterpart.  If your home’s purchase price is $250,000, FHA guidelines require you to have a down payment of $8,750.00 (3.5%) while a conventional loan would require a down payment of $12,500.00 (5%).    Credit and debt-to-income standards are also generally more lenient with government insured loans than conventional loan programs.

Now, there are some downsides to government-insured loans, like you are required to carry private mortgage insurance (PMI) along with paying an upfront fee of 1.75% (this is normally financed into the loan amount), and currently the rates on FHA loans are running .125%  higher than conventional loans.  You’ll want to make sure that you talk to your loan officer about all of the pros and cons of several types of loan programs before making your decision.

Keep in mind as well that loan type will have an impact on how much your loan will cost you.  That’s why it’s extraordinarily important that you work with a loan officer you can trust—one committed to absolute transparency in mortgage lending.   Make sure that you know, from the first time you discuss your mortgage loan, exactly the type of fees that he or she will charge and how much those fees are going to be.  And ask—point-blank– for full disclosure of the yield spread premium on the loan you’re considering.  Transparency is crucial to getting the best deal for you, and should quickly be added to your list of favorite things.    Like raindrops on roses and whiskers on kittens.

Raindrops on—where on earth did that come from?  Oh wait.

Honey?!  How many times do I need to ask you not to put that DVD in when I’m working….?