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It
is important for you to choose the loan that is best for you.
You will need to select the one that best fits your situation.
In order to obtain a loan for a purchase of a home you will be
required to give a mortgage on the home to a lender as security
for repayment of the loan. The lender agrees to hold the title
or deed to your property until you have paid back the loan, plus
intrest. Below I will list several loan and mortgage options that
are available.
Conforming
Loans-
These loans follow the terms and conditions set forth by Fannie
Mae and Freddie Mac. These are two private , congressionally chartered
companies that buy mortgage loans from lenders, therby ensuring
that mortgage funds are available at all times in all locations
around the country. Those loans that don't fit into the limits,
may have a higher interest rate, or may have a slightly different
underwriting requirement, paticularly in regard to the down payment
needed.
Fixed-Rate
Mortgages-
If you are planning to stay in the home a long period of time
or don't want to play chance with the interest market, than this
maybe the loan for you. Your payments will be the same over the
life of the loan. There are several fixed-rate mortgages available,
with 15, 20, and 30 year terms being the most common. However
these types of mortages may require larger monthly payments or
a larger down payment.
Adjustable-Rate
Mortgages (ARMs)-
ARMs often times intially offer lower interest rates than that
of a fixed-rate mortgage. You are also many times able to qaulify
for a larger loan. This is attractive to those who know that their
income will increase in the future or for those who don't plan
on staying in the home for an extended period of time. However
the interest rates will adjust to keep in line with the changing
market rates. Potentially you may have higher monthly payments
if the interest rates climb.
Goverment
Loan and Programs-
The Federal Housing Administration (FHA), the U.S. Department
of Veterans Affairs (VA), and the Rural Housing Service (RHS)
are three agencies that offer goverment-insured loans. Your loan
application must fit the requirements demanded by these agencies.
FHA
Loans-
You may be able to purchase a home with a very low down payment
(3% to 5% of the FHA appraised value or the purchase price, whichever
is lower).However FHA mortgages have a maximum loan limit that
varies per region depending on the average cost of housing.
VA
Loans-
These types of loans allows the qualified Veteran to buy a home
costing up to $203,000 with no down payment, and without limit
of the location of the property.You may also take a loan for 100%
of the purchase price, plus a funding fee that is normally 2%
for first time buyers. However you are required to occupy the
residence, and the loan is issued in the name of the Veteran,
and /or spouse or with another Veteran only.
RHS
Loans-
The Rural Housing Service offers low-interest rate loans with
no down payment to low and moderate income people who live in
rural areas or small towns.
State
and Local Programs-
Many states have assistance programs for first time buyers that
help them qualify for mortgages.They may offer low down payments
or low interest rates for those individuals that meet the guidelines
of the criteria. Some states also offer programs that assist the
first time buyer with closing cost and down payment. Contact your
lender or State Housing Authority to see if you meet the guidelines.
Ballon
Loans-
These types of loans offer lower fixed interest rates for a shorter
term, usally 5, 7, or 10 years. At the end of the short term,
it will require you to pay off the outstanding balance with a
lump sum payment, or you will need to refinance. The advantage
to this type of loan, is that it will let you apply for a larger
loan and will allow for lower payments intially. However there
is a chance you will have to pay a fee for refinancing the loan
to the current interest rate.
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