Decisions by MarijanStefanovic


									Decisions, Decisions - Which Mortgage Is Right For You? So, you need a mortgage.
Maybe you're buying a home, maybe you're refinancing an existing home. When you go
on the internet and do a search for "mortgages", you can get confused pretty quick.
Interest rates start popping up, you can become inundated with strange terminology that's
Greek as far as you're concerned, and you discover a plethora of lenders ready to close
your loan tomorrow. How do you know what loan type best suits your needs? The most
common loan type you may have heard of is a conventional loan. Conventional loans
adhere to underwriting guidelines set forth by Freddie Mac and Fannie Mae. Each
agency's guidelines are similar with a few exceptions, and are designed to allow for the
pooling of large amounts of loans with similar characteristics for sale on the secondary
market. Typically, a conventional loan for a primary home requires a minimum 5% down
payment, good credit, job stability and an average debt to income ratio. The average loan
limit is $417,000 for our area. If you are coming up with at least 20% of purchase price to
put down at closing, most likely, a lender will recommend you consider conventional
financing. The interest rate and cost to do the loan will vary depending on loan size,
credit score and loan to value. But it's always a safe place to start. As well, conventional
financing will apply to second homes and investment properties. You can get a little bit
more creative and look at adjustable rate conventional financing or interest only
conventional financing if there is a market condition (fixed rates are high) or a personal
motivation (interest only for better cash flow) to consider. A good mortgage lender can
talk to you about your goals and analyze other options for you to compare and decide. If
you are buying a primary home, you may want to consider other loan programs. In
particular, the FHA loan (it stands for Federal Housing Administration) is very popular
these days. FHA requires a minimum 3% cash investment on the part of the buyer, but
will finance up to 97.75% of the purchase price (the buyer would have to pay the
additional .75% in closing costs). FHA is a great product for people with more
challenging credit scores and less cash to invest in the property. It also allows for down
payment assistance to cover the 3% minimum investment, and the seller can pay up to
6% in closing costs. You can also use this product to refinance your home up to 95%
LTV, and it can be rate term or cash out. You don't have to be a first time home buyer to
qualify, either. The loan limit is capped, and is lower than conventional limits. So you
should check with your lender to see if it's an option for you. If you're a qualifying
veteran or the spouse of a deceased qualifying veteran, you'll want to look into a VA
loan. It allows for 100% financing and no monthly mortgage insurance. It also will let the
seller pay up to 4% of closing costs. And if you want to refinance your property, its cap is
90% LTV. There's no income limit and the loan amount limits are very generous - in line
with or above conventional financing. Rural Development (RD) loans are another good
bet, but your property has to be in a "defined" area as allowed by RD. It is not necessary
to be a to first time homeowner, but you must be purchasing your primary residence with
this program. There is an income limitation as it is designed for low to moderate income
families. As well, there is guarantee fee that applies which can be rolled into the loan
amount if the appraisal of the property warrants it. But this program does allow 100%
financing and no monthly mortgage insurance. So, if your property and your pay stub are
within the guidelines, and you have little or no down payment, it may be an excellent
resource for you. Finally, any of the above mentioned loans can be financed through the
Tennessee Housing Development Agency (THDA). To qualify for a THDA loan, you
must meet both the income eligibility requirements and the county acquisition limit set
forth. So you could get a THDA conventional loan, but you couldn't get a $417,000 home
with it. What's most attractive about THDA is its very competitive rate on a 30 year fixed
loan at or below the normal conventional market rate. THDA has grant programs
available to its borrowers to assist with down payments if necessary. There are some
guidelines that THDA is more stringent on, but usually they don't pose a problem for a
borrower who is considering this product. So, when you call your mortgage lender, you
can now at least have some idea of what type of loan you are interested in hearing more
about. And trust me, your lender will probably be able to give you further customized
choices once you decide which loan will best suit your needs. Kristin's articles on Home
Loans are very practical, consumer friendly information written in PLAIN ENGLISH.
Consumer education is critical to what is most often a family's largest and only
investment - their home. Visit: Kristin Mortgage dot Com Kristin Abouelata, Mortgage
Specialist with Mortgage Investors Group Let my experience work for you! Toll Free
(800) 489-8910

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