Loans  

Conventional Loans

Conventional loans are mortgage loans offered by non-government sponsored lenders.

These loan types include:

Fixed Rate Loans

Adjustable Rate Loans (ARMS)

Combination (Hybrid) Loans

Balloon Mortgages and Pledge Asset Loans

Jumbo/Construction Loans

Reversible Mortgage

 

FHA Loans

FHA mortgage loans are issued by federally qualified lenders and insured by the U.S. Federal Housing Authority, a division of the U.S. Department of Housing and Urban Development.

FHA loans are an attractive option, especially for first-time homeowners:

Generally easier to qualify for than conventional loans.

Lower down payment requirements.

Cannot exceed statutory rate limits.

 

VA Loans

Designed to offer long-term financing to American veterans, VA mortgage loans are issued by federally qualified lenders and are guaranteed by the U.S. Veterans Administration. The VA determines eligibility and issues a certificate to qualifying applicants to submit to their mortgage lender of choice. It is generally easier to qualify for a VA loan than conventional loans.

 

RHS (Rural Housing Service) Loans

The U.S. Department of Agriculture offers a variety of programs to help low to moderate-income individuals living in small towns or rural areas achieve homeownership. The Rural Housing Service (RHS) helps qualifying applicants, who cannot receive credit from other sources, purchase modestly priced homes as their primary residence.

RHS Loans are an attractive option because of:

Minimal closing cost
Low or no down payment

RHS loans can be used toward the purchase and renovation of a previously owned home or a new construction. Families must be able to pay their monthly mortgage, homeowner's insurance and property taxes.

Jumbo Loans

Jumbo Loans exceed the maximum loan amounts established by Fannie Mae and Freddie Mac conventional loan limits. Rates on jumbo loans are typically a little higher than conforming loans. Jumbo Loans are typically used to buy more expensive homes and high-end custom construction homes.

B/C Loans

B/C Loans do not meet the credit requirements of Fannie Mae and Freddie Mac. They are known as B, C and D paper loans. Loan applicants typically have a bad credit history, have filed for bankruptcy, or have had a property in foreclosure.

B/C Loans are often issues as temporary loans until the applicant can restore credit and qualify for conforming "A" loans. Interest rates on B/C Loans are generally higher than for conforming "A" loans.

Conforming Loans

Conforming loans are conventional loans that meet bank-funding criteria set by Fannie Mae (FNMA) and Freddie Mac (FHLMC). Both of these stock-holding companies buy mortgage loans from lending institutions and secure them for resale to the investment community. Every year, form October to October, Fannie Mae and Freddie Mac establish limits on what constitutes a conforming loan in a mean home price.

Buying back mortgage loans allow these agencies to provide a continuous flow of affordable funding to banks that reinvest their money back into more mortgage loans. Fannie Mae and Freddie Mac only buy loans that are conforming, to repackage into the secondary market - effectively decreasing the demand for non-conforming loans.

Fixed Rate Loans

With a fixed rate mortgage, the interest rate does not change for the term of the loan, so the monthly payment is always the same. Typically, the shorter the loan period, the more attractive the interest rate will be.

Payments on fixed-rate fully amortizing loans are calculated so that the loan is paid in full at the end of the term. In the early amortization period of the mortgage, a large percentage of the monthly payment pays the interest on the loan. As the mortgage is paid down, more of the monthly payment is applied toward the principal.

A 30 year fixed rate mortgage is the most popular type of loan when borrowers are able to lock into a low rate.

Benefits:

Lower monthly payments than a 15 year fixed rate mortgage

Interest rate does not go up if interest rates go up

Payment does not go up, it stays the same for 30 years

Drawbacks:

Higher interest rate than a 15 year fixed rate mortgage

Interest rate stays the same even if interest rates go down

A 15 year fixed rate mortgage allows you to pay off your loan quicker and lock into an attractive lower interest rate.

Benefits:

Lower interest rate

Build equity faster

If interest rates go up, yours is fixed

Drawbacks:

Higher mo Interest rate stays the same if interest rates go down

Interest rate stays the same even if interest rates go down