Financial Options

 

Whether you’re buying your first home or you’re interested in refinancing your existing home, this is where you’ll learn all about the basics of financing. There are many different types of home loans that you may get. Here is a sampling of the most popular financial options:
Real EstateFHA/VA. These Federal Housing Administration/Veteran’s Administration loans offer low to no down payment. Qualifications, however, are strict. To get a VA loan the borrower must have been on active duty Military during specific periods of time. Check with your lender.
Real EstateTwo-step. A 30-year mortgage that is fixed-rate for the first few years, then switches to an adjustable rate. For example, the interest rate might be fixed for the first 3, 5, 7 or 10 years. After that period, it switches to an adjustable rate. The advantage is that the short fixed-rate period results in a lower initial interest rate. For example, a 10-year fixed two-step might have an initial fixed rate that is 1/8% lower than market. A 3-year fixed two-step might have an initial interest rate that is 1û2% lower than market.
Real EstateConforming. A mortgage that conforms to the underwriting standards of the two major secondary lenders, Fannie Mae and Freddie Mac. Currently the maximum loan amount is $240,000. These are considered the best loans because they offer the lowest interest rate. However, they only go to the most qualified buyers. They may be “fixed-rate,” “ARM,” or some hybrid.
Real EstateJumbo. A loan for more than the maximum conforming amount (above). These loans can be for huge amounts, sometimes up to a million dollars, or more. They usually carry a slightly higher interest rate.
Real EstateSub-prime. A mortgage made available to a borrower who has credit problems. Also called “B” or “C” loans, they usually carry a significantly higher interest rate than for prime mortgages and are for a lower LTV (see above). Only certain lenders offer them. Check with your mortgage broker.
Real EstateReverse annuity (or Equity). Offered to seniors who own their home outright or only owe a small balance on the existing mortgage. These allow the borrower to receive a monthly payment from the lender, usually for life. When the borrower dies, the lender sells the home to pay off the mortgage.
Real EstateSecond mortgage. An additional mortgage, besides the first. Can be obtained from an institutional lender. When given by the seller in lieu of cash from the buyer, they are usually considered part of “creative financing.”
Real EstateLow-doc/No-doc. Where the borrower needs only minimum documentation of income to qualify. Designed primarily to help self-employed borrowers. Not always available and not from all lenders.

Every buyer has different wants and needs. Everyone has different financial situations.  This is why I highly encourage meeting with a highly qualified mortgage lender.  If you need credit repair check out our credit repair page.  Call me or email me today so I can connect you with one.