Types of Mortgages
It is important to know that all secondary market lending guidelines and pricing derive from the same basic entities. Requirements are typically established by the Federal National Mortgage Association (Fannie Mae / FNMA) the Federal Home Loan Mortgage Corporation (Freddie Mac / FHLMC) or the Government National Mortgage Association (Ginnie Mae / GNMA).
These products offer a fixed interest rate for the life of the loan with terms from 10 to 30 years.
These products are also referred to as hybrid-ARMs. They offer a lower introductory interest rate and payment (typically from one to five years). After the initial fixed-rate period the loan’s rates and payments will then adjust as market rates change.
Government Insured Loans
- FHA – FHA loans are insured against default by the Federal Housing Administration. FHA loans require smaller down payments and also feature less-stringent income and financial requirements. Financing can be in fixed-rate loans of 15 to 30 years and various hybrid-ARM products.
- VA – VA loans are guaranteed by the Department of Veterans Affairs and are available to qualified veterans, active-duty personnel and reservists. VA loans require low- or no-down payments and financing can be in fixed-rate loans of 15 to 30 years and hybrid-ARM products.
- RD – RD loans are insured against default by the United States Department of Agriculture. These loans are made on properties in smaller communities and in rural areas. There are also maximum income limits. RD loans require no money down and can sometimes finance part of the closing costs of the purchase financing if the property appraises for more than the purchase price.
- HUD Section 184 – Section 184 loans are insured through the Office of Native American Programs of HUD and are available for members of approved Native American tribes. These loans require smaller down payments as well as income and financial requirements similar to FHA.
Benefits of Government Insured loan products
- Less Cash Needed – Minimum or no-down payment.
- Preserve Your Assets – Allow gifts and grants so customer does not have to tap into any savings
- Accommodating – Except for RD loans, government programs have no income limits, allow higher percentage of income to go toward mortgage payments, and expanded credit guidelines
- Seller Contributions – Allows sellers to contribute toward closing costs up to 4% for VA loans and up to 6% for FHA loans
- Lower Cost – Typically lower cost compared to standard, conventional financing.
Conventional mortgages are not insured or guaranteed by the U.S. Government. Private mortgage insurance is usually required with down payments of less than 20 percent as a protection for the lender’s investment if the borrower defaults. There are many different programs offered with Conventional financing from fixed–rate loans of 10 to 30 years to many Adjustable loan programs.
If you are seeking a loan to help build your home we can help with our bank lenders and mortgage lenders working together to create a lending program to meet your needs.
Whatever your home financing needs, we are ready to help with a broad range of programs, money-saving options and personalized service.
Call us today at 1-888-554-5152 for a Mortgage Loan Professional in your market.