Conventional loans are the most common loan type and are just basically every loan that is NOT FHA/VA, Jumbo or any other specialized loan product or Government subsidized loan product. They are typically 30 or 15 year term loans and can be fixed rate or adjustable rate loans.
FHA loans are Government backed loans which are typically used by first time homebuyers because they only require a 3.5% down payment. They are usually one of the easiest loans to qualify for and have many ancillary benefits as well including Assumption Options, Low Interest Rates and Deferment Options.
VA loans are for eligible military Veterans and are Government backed loans also. This is one of the few loan types left after the mortgage crisis that still allows for No Down Payment. The other advantages are very similar to FHA loans.
Jumbo loans are any loan that exceeds the FNMA or FHLMC loan limits which for practical purposes in our area is $417,000. These loans are typically harder to qualify for because of their size and usually have slightly higher interest rates than FNMA/FHLMC loans because of the higher risk and the relative lack of funding available for these loans.
2nd Mortgage loans are any loans that are secured by your real estate that are made IN ADDITION to your 1st mortgage. These loans are used for the purposes of lowering the down payment requirement when buying a house and also eliminating Mortgage Insurance requirements, for doing home improvements, for consolidating other debt, for tuition expenses and many other large expenses that you might run into.
Home Equity Lines of Credit (aka HELOCs) are just 2nd mortgages that are used much like a credit card where you draw the funds you need and can pay the balance down and draw the funds back out continuously throughout the agreed period of time that you have the line. HELOCs are typically variable or adjustable rate loans.
Adjustable Rate Mortgages (aka ARMs) are loans that have rates that adjust periodically. There are many different types of ARMs and each has an appropriate purpose and use. A few examples of the types of ARMs that are available are 10/1, 7/1, 5/1, 3/1 and 1/1 ARMs: the first number indicating the initial period of time (in years) for which the interest rate is fixed and the second number indicating the frequency of the periodic interest rate changes (in years) after the initial period has passed. Most ARM loans are 30 year term loans. There are a multitude of variations of ARM programs and products and it is important to learn as much as you can about the intricacies associated with any one of these loan types. There are a few very important features of these loans that you should know before executing an agreement to take one of these loans. You should know what the interest rate changes are based upon (the INDEX), the margin over that index or the number added to that index to determine your rate (the MARGIN), and the limitations on the maximum and minimum that the interest rate can be (the CAPS). For more information and a thorough examination of options, please contact us.
Reverse Mortgage loans (aka Home Equity Conversion Mortgages) are loans used for people who have reached retirement age (typically 62) and have a fair amount of equity in a home. These loans can be used to ELIMINATE MONTHLY PAYMENTS for the remainder of a person’s life or can be used to PAY OUT MONTHLY PAYMENTS to the homeowner to supplement their income. These loans can be used to PURCHASE a home also. There are many misconceptions about this loan product because of its lack of widespread use. Please contact us for further details.
USDA loans are used for financing properties in Rural areas or for Agricultural use. There are restrictions on what properties can be financed with this loan product and also Income restrictions on those borrowers wishing to use this loan. To determine more about those Eligibility requirements, you can visit this website: http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do
CHFA loans (aka Colorado Housing and Finance Authority) are exclusively for First time homebuyers and combines FHA 1st mortgage financing with a Loan for down payment as well so that eligible borrowers can effectively buy a home with No Money Down. There are income and property restrictions on this finance option as well. To get more information on these Eligibility requirements, you can visit this website: http://www.chfainfo.com/
FNMA Home Path loans are used to purchase properties that have been foreclosed upon and are now owned by FNMA. This is an excellent financing option for someone looking to purchase one of these FNMA REO properties with 5-10% down. They have forgiving underwriting requirements and No Mortgage Insurance requirements. To search properties owned by FNMA, you can visit this website: http://www.homepath.com/. This site only has very general information pertaining to the actual financing detail so please email or call us for more info.
Loan Modifications are actually done by your current mortgage holder and are used in cases where you are having a hard time making the current mortgage payments and do not qualify for traditional refinancing options. They can be very time consuming to complete because there is very little financial motivation for the institution to do them. There is a government sponsored program called Making Home Affordable http://www.makinghomeaffordable.gov/pages/default.aspx which has provided some incentives for mortgage holders to complete modifications. Many institutions also have their own versions of this government program which are there to keep homeowners in their houses so the bank doesn’t have to foreclose on them. If you can get a modification completed, it can be an excellent option. We can give you advice and information about how to best go about this process.