A conventional loan is a mortgage loan that is not insured or guaranteed by the government. Conventional loans can have a fixed interest rate or an adjustable interest rate, with typical fixed rate loans having a term of 15 or 30 years. The down payment can be as little as 3%, debt to income ratios cannot exceed 45%.
An FHA loan is a mortgage loan that is insured by the Federal Housing Association (FHA). Instead of providing the loan, the FHA insures the mortgage to the lender. They offer a number of benefits that are not available with other loans, making them ideal for first-time homeowners, or buyers who do not have perfect credit history or a substantial amount of money for the down payment.
VA loans offer flexible underwriting guidelines and come with significant benefits, including no Mortgage Insurance (MI) and no down payment, which allow veterans and service personnel to more easily purchase a home. They are rising in popularity, with almost 630,000 loans guaranteed in 2013 – the highest number since the program began over 70 years ago. To qualify for a VA loan, borrowers must present their certificate of eligibility to the lender.
203K Renovation Loan
A renovation loan (also called a 203k), is an all-in-one mortgage loan and remodeling loan financed under one institution. There are many different types of renovation loan programs to fit the buyers needs. There are two different types of Reno loans, FHA 203k Full and FHA 203k Streamline. The Full is required when repairs exceed $35,000. A HUD consultant is required for the Full. A Streamlined is intended for homes that do not need extensive repairs and repairs do not exceed $35,000. A HUD consultant is not required for a Streamlined.
A jumbo loan is any single loan amount that exceeds the limit set by Fannie Mae and Freddie Mac, the two government-sponsored enterprises that buy mortgages from lenders. The limit is currently $417,000 for a one-unit property for the majority of the United States, but the confirming limit is higher in areas of the country where housing is more expensive.
A USDA loan provides 100% financing for low and medium income buyers who are looking to purchase a home in a rural development area. Eligibility is restricted to “rural” areas, which is a area defined as land with fewer homes or office buildings.
ARM loans are a great option for those planning to only be in their home for a short period of time. The ARM (Adjustable Rate Mortgage) loan offers a lower interest rate for a fixed period of time and will adjust after that. Interest rates can be fixed for 3, 5, 7, or 10 years. There are a number of options within the ARM product line. It is important to assess them closely to determine the best option for you.
If you are aged 62 or over, a reverse mortgage loan is an excellent way of tapping into home equity and receive money from your home. Instead of making payments to a lender, the lender makes payments to the borrower. The money can be withdrawn in a single lump sum or received in monthly payments, depending on the arrangements made in the reverse mortgage loan agreement.
Frequently Asked Questions
Do I need a fixed adjustable rate?
Fixed-rate loans have interest rates that do not change during the life of the loan. Adjustable-rate loans have rates that are linked to an index, Prime, and therefore can change over time. The initial interest rate on an ARM is set below the market rate on a comparable fixed-rate loan, and then the rate rises as time goes on.
How much money can I borrow?
The amount you’re able to borrow depends on your income and your debts. To calculate your debt-to-income ratio, write down all of your monthly debts, then divide that amount by your monthly gross income.
What is PMI?
Private Mortgage Insurance (PMI) protects lenders against losses that can occur when a borrower defaults on a mortgage. PMI is required on conventional mortgage purchase transactions when the borrower has less than a 20% down payment. Once 20% equity is reached, PMI drops off the mortgage payment. You can use our mortgage calculator Toledo Ohio for more information on calculating PMI into your payments.
Which amounts are included in my monthly payments?
An easy way to remember what’s included in your mortgage payment is an acronym called PITI (Principal, Interest, Taxes, Insurance).
What are the closing costs?
Closing costs include items such as title insurance, pre-paid interest, appraisal fees, attorney fees, and title insurance fees. The fees for these items can vary depending on factors of the loan and property.
What is pre-paid interest?
When you close your loan, interest accrues in between the closing date and the last day of that calendar month. The accrued amount is then added to the total closing amount.
How is the pre-approval decision made?
Your pre-approval decision is made when your information is submitted and reviewed by a licensed loan officer. We look at your standing debts, credit report, credit score, income and ability to repay the loan. Once you are pre-approved, you can start looking for homes with confidence and sellers will feel more comfortable working with you.
Can I finance my rental property?
Yes. However, the interest rate will most likely be higher because there is more risk for the bank when lending on a property that is not the customers primary residence.