Conventional Loans
Conforming Loans
FHA / VA Loans
Fixed Rate Mortgage
Jumbo Loans
Adjustable Rate Mortgage (ARM)
Conventional Loans
Conventional loans are mortgage loans offered by non-government sponsored lenders. These loan types include:
What does FHA have for you? Want a fixer-upper? Financial help for seniors Want to make your home more energy efficient? How about manufactured housing and mobile homes? Why A VA Loan? Five Easy Steps To A VA Loan 5. Close the loan and the buyer moves in.
Conforming Loans
Conforming loans are conventional loans that meet bank-funding criteria set by Fannie Mae and Freddie Mac. 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.
FHA / VA Loans
FHA loans have been helping people become homeowners since 1934. How do we do it? The Federal Housing Administration (FHA), which is part of HUD insures the loan, so your lender can offer you a better deal.
Buying your first home?
FHA might be just what you need. Your down payment can be as low as 3.5% of the purchase price, and most of your closing costs and fees can be included in the loan. Available on 1-4 unit properties.
FHA has a loan that allows you to buy a home, fix it up, and include all the costs in one loan. Or, if you own a home that you want to re-model or repair, you can refinance what you owe and add the cost of repairs - all in one loan.
Are you 62 or older? Do you live in your home? Do you own it outright or have a low loan balance? If you can answer "yes" to all of these questions, then the FHA Reverse Mortgage might be right for you. It lets you convert a portion of your equity into cash.
You can include the costs of energy improvements into an FHA Energy-Efficient Mortgage.
Yes, FHA has financing for mobile homes and factory-built housing. We have two loan products ? one for those who own the land that the home is on and another for mobile homes that are - or will be - located in mobile home parks.
The more you know about our home loan program, the more you will realize how little "red tape" there really is in getting a VA loan. These loans are often made without any downpayment at all, and frequently offer lower interest rates than ordinarily available with other kinds of loans. Aside from the veteran's certificate of eligibility and the VA-assigned appraisal, the application process is not much different than any other type of mortgage loan. And if the lender is approved for automatic processing, as more and more lenders are now, a buyer's loan can be processed and closed by the lender without waiting for VA's approval of the credit application.
Additionally, if the lender is approved under VA's Lender Appraisal Processing Program (LAPP), the lender may review the appraisal completed by a VA-assigned appraiser and close the loan on the basis of that review. The LAPP process can further speed the time to loan closing.
1. Apply for a Certificate of Eligibility. A veteran who doesn't have a certificate can obtain one easily by completing VA Form 26-1880, Request for a Certificate of Eligibility for VA Home Loan Benefits and submitting it to one of the VA Eligibility Centers with copies of your most recent discharge or separation papers covering active military duty since September 16, 1940, which show active duty dates and type of discharge.
2. Decide on a home the buyer wants to buy and sign a purchase agreement.
3. Order an appraisal from VA. (Usually this is done by the lender). Most VA regional offices offer a "speed-up" telephone appraisal system. Call the local VA office for details.
4. Apply to a mortgage lender for the loan. While the appraisal is being done, the lender (mortgage company, savings and loan, bank, etc.) can be gathering credit and income information. If the lender is authorized by VA to do automatic processing, upon receipt of the VA or LAPP appraised value determination, the loan can be approved and closed without waiting for VA's review of the credit application. For loans that must first be approved by VA, the lender will send the application to the local VA office, which will notify the lender of its decision.
Fixed Rate Mortgage
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:
Drawbacks:
A 15 year fixed rate mortgage allows you to pay off your loan quicker and lock into an attractive lower interest rate.
Benefits:
Drawbacks:
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.
Choosing an ARM is a good idea when:
ARMs have the following distinguishing features:
Index
An adjustable rate mortgage's interest rate increases and decreases based on publicly published indexes. ARMS are based on different indexes including:
Margin
Margin is fixed percentage pointed added to the index - accounting for the profit the lender makes on the loan. Margins are fixed for the term of the loan.
interest rate= index + margin
Adjustment Frequency
Adjustment frequency reflects how often the interest rate changes - also known as the reset date. Most ARMs adjust yearly, but some ARMs adjust as often as once a month or as infrequently as every five years.
Initial Interest Rate
The initial interest rate is the interest rate paid until the first reset date. The initial interest rate determines your initial monthly payment, which the lender may use to qualify you for a loan. Often the initial interest rate is less than the sum of the current index plus margin so your interest rate and monthly payment will probably go up on the first reset date.
Interest Rate Caps
Interest rate caps put limits on interest rates and monthly payments.
Common caps:
Initial Adjustment Cap
An initial adjustment cap limits how much the interest rate can change at the first adjustment period.
Example:
If your ARM has a 1% initial adjustment cap, your interest rate may only increase or decrease by a maximum of 1% at the first adjustment period.
Periodic Adjustment Cap
A periodic adjustment cap limits how much your interest rate can change from one adjustment period to the next. Usually a six-month adjustable rate mortgage will have a one percent periodic adjustment cap while a one-year adjustable rate mortgage will have a two percent periodic adjustment cap.
Example:
If your loan has a 2% periodic adjustment cap, your interest rate may only increase or decrease by a maximum of 2% per adjustment period.
Lifetime Cap
A lifetime cap sets the maximum and minimum interest rate that you may be charged for the life of the loan. Most ARMs have caps of 5% or 6% above the initial interest rate.
Example:
If your loan has a 6% lifetime cap, your interest rate may only increase or decrease by a maximum of 6% for the life of the loan.
Initial adjustment caps, periodic adjustment caps, and lifetime caps make up an adjustable rate mortgage's cap structure, and are usually represented as three numbers.
Example:
1/2/6 -- Initial adjustment cap is 1 %/ periodic cap is 2% / lifetime cap is 6%.