Personal Finance Tips

In the past, homebuyers more or less had limited mortgage loan options. These days, there are more options than you can shake a stick at, but here’s a primer on the basics.

Mortgage Loans

With the real estate market explosion over the last 10 years, a call has gone out for unique mortgage loan programs. Bankers have been more than happy to answer the call. For many borrowers, traditional mortgage loans still fit the bill. Here’s an introduction.

1. Conforming Loans – The loans comply with requirements set down by Fannie Mae and Freddie Mac, two government sponsored entities that buy and sell loans from mortgage lenders. These entities put strict caps on the loans they will buy, with single-family homes having a mortgage cap in the range of $360,000. With the booming real estate market, many areas such as San Diego do not come close to fitting into the conforming loan market since homes average in the $600,000 range.

2. Non-Conforming Loans – Known as “Jumbo Loans”, these mortgages are written for loans that exceed the $360,000 cap mentioned previously. They tend to have slightly higher interest rates, but are readily available.

3. Bad Credit Loans – In the mortgage industry, mortgage brokers often refer to a borrower’s “paper.” This paper refers to people with less than stellar credit. “B” paper refers to relatively small problems, while “D” paper refers to bigger issues such as bankruptcy filings. The worse your paper, the more you can expect to pay in interest, points and down payment amounts. You need to carefully determine whether paying these extra penalties makes financial sense.

Interest Rates

With each of the above loans, you’ll have an option of going with a fixed interest rate or an adjustable rate. Fixed interest rates simply set a definitive interest rate that will be charged over the length of the loan. Adjustable rates typically start at a figure lower than fixed rates, but can be moved up to reflect changes in the cost of borrowing money. In many ways, you are betting whether interest rates will increase in the future.

For a great majority of people, basic mortgage loan options still suffice when it comes to borrowing money. Don’t fret if you have problems qualifying for these loans. There are many other options on the market these days.

You may have heard a lot about FHA loans recently in the news, but do you know what they all about? FHA home loans are insured by the Federal Housing Administration. They do not loan money to the public. The FHA has been there since 1934.

There are many advantages to get FHA loan for conventional loans. For several years in the mortgage industry, underwriting guidelines tighten. It has become very difficult to get a low down payment conventional mortgage loans if you do not have very high credit score and even then they are very difficult to obtain. An FHA home loan is a very good alternative.

In cases of very real, certain types of property in one country may allow applicants to borrow more than the same size property in other states. FHA home loans are not only available to buy a new house. Applicants for these loans can also get it if they need to fix the house or make it more energy efficient.

Your qualifications are bound by your credit history and have a good credit history will give a better chance of being approved for FHA loans. In the case of FHA loan requirements, there is enough information to be provided by an applicant to get the process started.

The following thing are some of the advantages of an FHA loan:

It has front low (3.5%,low credit score ok, usually down to score 620,Non-Occupant co-borrowers are allowed and all combined income, all cash advance can be a gift from family members, jobs – two-year history is required. However, not necessarily in the same field of work, no cash reserves required on 1-2 unit properties, and many more.