• Conventional Loans
  • FHA Loans
  • VA Loans
  • Refinance

A conventional loan is a lender agreement that is not guaranteed or insured by the federal government under the Veterans Administration (VA), the Federal Housing Administration (FHA), or the Rural Housing Service (RHS) of the U.S. Department of Agriculture. 

A conventional loan can, however, follow the guidelines of government sponsored enterprises (GSE's) like Fannie Mae or Freddie Mac. Both Fannie Mae and Freddie Mac are stockholder-owned corporations and are not part of the federal government.

Conventional loans may be conforming and non-conforming. Conforming loans follow the terms and conditions set by Fannie Mae and Freddie Mac. Nonconforming loans do not meet Fannie Mae or Freddie Mac qualifications, but are also considered conventional.

 

A mortgage issued by federally qualified lenders and insured by the Federal Housing Administration. FHA loans have been designed for low to moderate income borrowers who are unable to make a large down payment. 

They also can be a good solution for those with excellent credit and income. Typically they require a 3.5% down payment which can come from almost anyplace. In most cases the money can be a gift from a family member. The closing costs can also be financed with the mortgage, lowering the initial costs of purchasing a home.

You may also use an FHA loan to refinance. This option allows for easier credit qualifications than conventional loans and also allows for higher loan to values on the overall transaction.

A Veterans Administration Loan will allow a veteran and/or a veterans spouse to purchase a home with no money down. A funding fee will be required at closing but it can be financed.

The benefits of a VA loan are that there is no down payment required, no mortgage insurance required, easier qualification standards, no prepayment penalties and credit and income requirements are more flexible. You may also refinance with a VA loan under certain qualifying criteria.

You may want to refinance your home for the following reasons:

  • Reduce your effective interest rate and payment.
  • Obtain cash proceeds for home improvements, debt consolidation or investments.
  • Obtain a fixed rate and or shorter amortization term.
  • Eliminate the need for Private Mortgage Insurance.
  • Depending on your goals for the new loan, you may want to consider what the best loan terms will be for you.
Sunday, September 24, 2017

Types of Loans

Types of Loans