Loans of All Kinds
What kinds of loans are out there? There are a lot of different kinds of mortgages available to people. The Federal Housing Administration (FHA) Home Loan and the Veterans Affairs (VA) Loan are two of the most popular mortgage brokers. Because the government backs the FHA mortgage and the VA mortgage, borrowers can make a smaller down payment and have less strict requirements for their credit and assets than with traditional loans. Here are more details about the main kinds of loans, such as FHA mortgages and VA mortgages.
Conventional loans are usually those with loan amounts that are equal to or less than the most that Freddie Mac or Mannie Mae will buy.
The Federal National Mortgage Association is better known by the name Fannie Mae. Fannie Mae is a company that was set up by Congress and is owned by its shareholders. It buys mortgages from lenders and sells them as securities on the secondary home mortgage market. Fannie Mae looks at a number of things before giving you a loan, such as your credit score, how much debt you have, and how long you've been working.
Freddie Mac The Federal Home Loan Mortgage Corporation is better known by the name "Freddie Mac." In 2006, the most that Fannie Mae Mortgage and Freddie Mac company will lend is $417,000 each. Freddie Mac does not give out mortgages directly. Instead, they buy mortgages from lenders and sell them as securities on the secondary mortgage market. Before approving you, Freddie Mac looks at a number of things, like your credit score, how much debt you have, and how long you've been working.
The government backs loans. FHA, VA loans.
The Federal Housing Administration (FHA) mortgage is better in some ways than a regular mortgage. Since the government backs FHA mortgages, they tend to have easier qualifications and lower down payment requirements. They may also be transferable. Depending on where you live, the maximum loan amount you can get with an FHA loan is different. Find out from your mortgage broker what these maximum amounts are for your city. FHA loans are often used by people who are buying their first home. They also make a lot of sense if you want to buy a multifamily home to live in and get the most money possible. With an FHA loan, the mortgage insurance is the same no matter how much the loan is worth. This is not the case with a conventional loan. People with a high LTV pay a much higher insurance payment.
Many of the same benefits come with a VA (Veterans Affairs) mortgage as with an FHA mortgage. But to get this mortgage, you must be a qualified veteran, the widow of a veteran who hasn't remarried, or a serviceman on active duty. Talk to your mortgage broker about the most you can borrow, any down payments you need to make, and how much your funding fee will be. For VA loans, there is no monthly payment for mortgage insurance. Instead, the borrower pays a one-time fee for "insurance." The percent of the loan amount varies, but it won't be more than 4 percent right now. These are not the same as origination points or discount points.
Non-Conforming or Jumbo mortgages are loans for amounts that are more than the limit for conforming mortgages. At the moment, a single family costs $359,650. So, if you need to borrow $500,000 to buy a new home, it will be a jumbo loan. Most of the time, the interest rates on jumbo loans are about 1/2 percent higher than those on conforming loans. If you need to borrow this much money, you should ask your broker if you can split your loan into a first mortgage and a second mortgage so you don't have to get a jumbo loan and pay more in interest.
A mortgage broker can help you find the best rate and product for your situation. Talk to them about what you can do.
