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What Kind of Loans are Available?

There are a lot of different options in lending today and it can be a little overwhelming if you are new to the Home Buying Process. I Will begin by listing brief descriptions of the most common financing options. Conventional loans
The Conventional loan is a fully documented loan that will generally have the lowest rate that is available. These loans are generally available to people with credit scores over 650 and good job stability and assets. The loans are frequently sold to Fannie Mae.

30 year fixed – This is a loan which is paid in 360 equal monthly payments with a fixed rate interest. It is a great option if you have found the home of your dreams and don’t anticipate moving for a long time. It is also the lowest minimum monthly payment you can get in a fixed rate long term loan.. The good thing about these loans is that they  can be prepaid without penalty. This means that you can make extra payments to principal when you can, and can make the minimum payment when you can’t. If you can make extra principal payments you can get your loan paid off more quickly and you can potentially  save big bucks in interest payments.

15 year fixed – Generally the rate is a little lower (around 1/4 of a percent)  than a 30 year fixed rate loan, but the payment is higher. All of the extra payment goes toward the principal so that the loan is paid in full in 15 years.  Its a great option if you know you can afford the payment, you will save a huge amount.

One Hundred Percent Loans -The VA offers a 100% loan to veterans, but there are charges which add up to as much as 3% of the loan amount. They are known as the Funding Fee and it varies depending on the length and nature of the individual borrower’s Service. Veterans that have served active duty during a war have the lowest cash due at closing. See VA below for more information on VA loans.

    FHA – FHA is the financing option that was designed to help people who are a little credit challenged. The minimum credit score to qualify for a FHA loan is normally 615 and the buyer is  required to make a 3.5% down payment downpayment. The difference between FHA and conventional loans is primarily that the mortgage insurance (known as PMI with conventional loans) is called MIP (for mortgage insurance premium) in FHA loans, and the Buyer must pay the mortgage insurance premium in advance at the closing table. This MIP payment can be added to the loan amount and financed and it amounts to 1.5% of the loan amount. The monthly premium is .5% per year paid monthly (200,000 loan x .005= $1000/12= $83.34 per month.).

    VA
    Non Qualifying
    Stated Asset
    Stated Income
    Hard Money Loans
    B and C Paper
    How to Find a Lender

    * How much can I afford?
    * Credit
    * Loan Application
    * Loan Underwriting
    * Fees Associated with Loans
    * Loan Calculators