|
|
|
In today's market the news has focused on the issues in the "sub-prime" mortgage industry. Unfortunately that news has scared many buyers in to thinking that there are no loans available to buy a new home. This isn't true. Some loan programs have gone away and new loan programs have taken their place. There are a number of factors that a lender will consider when talking to you about a loan. Your income, your credit, your assets and your debt are the first things you will need to document. From there a lender will help you determine what is the best program for your needs, not only today but for 3, 5, 7 years and more.
he list below is just a brief outline of some of the most common programs available. I have broken the programs down in to two basic categories to get you started.
Private Sector
Conventional Loans - The only security guarantee is the value of the property.
-
Fixed-Rate Mortgage
The interest rate and the principal payments remain fixed throughout the loan. Keep in mind your monthly escrow account payment could vary from year-to-year as taxes and insurance rates change.
-
Variable or Adjustable-Rate Mortgage
The interest rate on the loan fluctuates over the period of the loan. Periodic adjustments to the interest rate are made based on changes to a defined index. The loan's interest rate is determined by adding a fixed number of points to the defined index.
-
Balloon Loan
Short term, fixed-rate mortgage that has monthly payments usually based on a 30-year amortization schedule and a lump sum payment due at the end of term, usually 3, 5 or 7 years. The interest rate on balloon loans is usually less than a 15- or 30-year fixed-rate mortgage.
-
80/10/10
A second mortgage that closes with the first. Often the first mortgage is for 80% of the purchase price and the second loan is for 10%. The home buyer covers the remaining 10% with their down payment. (Some lenders will write a second mortgage of 15% or even 20% of the purchase price.)
Government
-
FHA Loans
The Federal Housing Authority (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), plays a significant role in helping low- to moderate-income families qualify for mortgages. FHA assists first-time buyers and others who would not qualify for a conventional loan, by providing mortgage insurance to private lenders. Interest rates for an FHA loan are usually the going market rate, while the down payment requirements for an FHA loan are lower than conventional loans. The required down payment can be as low as 3 percent and the closing costs can be included in the mortgage amount.
-
VA Loans
VA Loans are guaranteed by the U.S. Department of Veterans Affairs. Service persons and veterans can qualify for a VA Loan, which usually offers a competitive fixed interest rate, no down payment and limited closing costs. While the VA does not issue the loans, it does issue a certificate of eligibility required to apply for a VA loan.
If you need a recommendation of a mortgage professional to talk with about your options please give me a call. I can give you the name of a reputable lender to talk with. NO OBLIGATION!
|
|
|