These are the most common types of first mortgages for consumers with a 0%-20% down payment and good credit. A 3%-9% seller's concession towards closing costs is allowed based on LTV, (loan to value). These loans are underwritten through common guidelines set forth by Fannie Mae (or the Federal National Mortgage Association) and Freddie Mac (the Federal Home Loan Mortgage Corporation.)
FHA (Federal Housing Administration) Loans
Started in 1934, these are loans insured by the FHA. They help low to moderate income families get mortgages. They require 3.5% into the transaction. A 6% seller's concession toward closing costs is allowed. FHA is often used by first time home buyers, but is not limited to First Time Home Buyers.
VA (Department of Veterans Affairs) Loans
Established in 1944, these loans are to assist eligible people on active military duty or retired status to buy primary residences. This loan requires no down payment and the seller can pay for all of the closing costs.
A USDA Loan is a mortgage loan that is insured by the US Department of Agriculture and available to qualified individuals who are purchasing or refinancing their home loan in an area that is not considered a major metropolitan area by USDA. USDA eligible areas are based on population for that area. USDA provides 100% Financing, no money down. Up to 6% Sellers Concession is allowed. You do not have to be a Frist Time Homebuyer to be eligible.
Any loans over $417,000 are considered Jumbo Loans. They usually carry a higher interest rate and more money down than a conventional loan. For most counties, loans over the conforming amount of $453,100 are considered Jumbo Loans. Some counties with high home prices are considered High Balance Counties and the High Balance Conforming County Limit is $679,650. Jumbo loans usually carry a higher interest rate, but do have Fixed Rate and ARM Options. Borrowers with excellent credit may be able to put as little at 5% Down (95% Financing) but 10% down (90% financing) is the standard for most lenders.
Fixed Rate Mortgages
The interest rates on these mortgages are fixed for the life of the loan. The 30 year fixed is most common term used for a purchase and the 15 year fixed being popular for refinances.
Interest Only Loans
These loans require an interest-only payment for an initial period of time which varies from 5-15 years. After the interest only period is done the outstanding principal balance is then amortized into a principal and interest payment for the remaining term of the loan. Note: You can make payments toward the principal balance at any time. Whatever the principal balance is at the end of the interest-only period is amount that will be amortized into the remaining term.
These loans are meant to finance the actual construction of a home. They are usually interest-only loans and are then paid off or converted into permanent financing when the construction has been completed. They have higher rates than permanent financing.
Home Equity Loans
These are used to take out a relatively small amount of money ($10,000-$50,000) for almost any purpose imaginable, from fixing up your house, funding an education, to buying a new car. The interest rate on these is usually competitive, there are few fees, and because of the equity position these loans are usually tax deductible.
Mortgage Network Solutions Branch NMLS ID #767520
Licensed by New Jersey Department of Banking & Insurance
Licensed by the Pennsylvania Department of Banking #20838
Licensed by Florida OFR www.nmlsconsumeraccess.org