There are many different types of loan programs available to home buyers. At Sachs Realty, we can recommend qualified loan officers to qualify you and discuss your loan options.
Here are a few options available to qualified buyers.
Fixed rate mortgages:
Fixed-rate mortgages offer the same interest rate for the entire term of the loan. Your monthly mortgage, with exception to any escrow, will stay the same throughout the repayment term.
Adjustable or variable rate mortgages:
Adjustable-rate mortgage loans (ARMs) have interest rates that will change or adjust from time to time.
Government insured loans (FHA loans):
The Federal Housing Administration (FHA) mortgage insurance program is managed by the Department of Housing and Urban Development (HUD), which is a department of the federal government. FHA loans are available to all types of borrowers, not just first-time buyers. The government insures the lender against losses that might result from borrower default. This program allows borrowers a down payment as low as 3.5% of the purchase price. The disadvantage of an FHA loan is the borrower will have to pay for mortgage insurance. This increases the size of the monthly payments.
A conventional home loan is a loan that is not insured or guaranteed by the federal government.
The U.S. Department of Veterans Affairs (VA) offers a loan program to military service members and their families. VA Loans are similar to the FHA loan program, however VA loans are guaranteed by the federal government. This means the VA will reimburse the lender for any losses that may result from a borrower defaulting on their mortgage. The borrowers can receive 100% financing for the purchase of their home. This means no down payment!
USDA / RHS Loans:
The United States Department of Agriculture (USDA) offers a loan program for borrowers purchasing in rural zones who meet certain income requirements. This program is managed by the Rural Housing Service (RHS), which is part of the Department of Agriculture. This type of mortgage is offered to residents in rural zoning who have a steady, low or modest income and yet are unable to obtain adequate housing through conventional financing." Income must be no higher than 115% of the adjusted area median income [AMI]. The AMI varies by county.
A jumbo loan, on the other hand, exceeds the conforming loan limits established by Fannie Mae and Freddie Mac. This type of mortgage represents a higher risk for the lender, mainly due to its size. As a result, jumbo borrowers typically must have excellent credit and larger down payments, when compared to conforming loans. Interest rates are generally higher with the jumbo products, as well.
A conforming loan is one that meets the underwriting guidelines of Fannie Mae or Freddie Mac, particularly where size is concerned. Fannie and Freddie are the two government-controlled corporations that purchase and sell mortgage-backed securities (MBS). Simply put, they buy loans from the lenders who generate them, and then sell them to investors via Wall Street. A conforming loan falls within their maximum size limits, and otherwise "conforms" to pre-established criteria.
Contact Luke Bond now to discuss getting you qualified for the best loan available.