Maria Ny asked:




This article summarizes the differences between conventional and government loans for first-time buyers, homeowners looking for mortgage refinancing, and those looking to cash out on equity for loan consolidation, debt consolidation or home improvement through home equity loans (second mortgages).

Conventional Mortgages

o Not guaranteed or insured by the Federal Government.

o Features 0% to 20% down payment options.

o Usually fixed mortgage rates for 15 to 30 years or adjustable rate mortgages (ARMs).

o Maximum conforming limit is $417,000. Otherwise, it’s a jumbo or non-conforming conventional loan.

Government Mortgages

o Insured against default by the Federal Government, making qualification less stringent:

- FHA loans are insured by the Federal Housing Administration.

- VA loans are guaranteed by the Department of Veteran Affairs.

o FHA loans require 3% down payments and are 15 and 30 year fixed rate loans or 1 year ARMs.

o VA loans are only available to eligible veterans or surviving spouses of deceased veterans.

o No down payment required–up to 100% financing allowed.

o Maximum loan amounts for government loans are set geographically.

o Mortgage refinancing into government loans is only available to existing holders of government mortgages.

Stated Income Mortgage Loans

“Stated-income mortgages are for people who make the money they say they make, but that amount doesn’t show up on the bottom line of their income taxes,” says Hugh McLaughlin, president and CEO of KMC Mortgage Services Inc., a lender and broker in Naples, Florida. They are non-conventional loans with higher rates than conventional mortgages–borrower interest rates depend on several factors: income stability, debt-to-income ratio, credit score, down payment and property appraisal value. Stated income mortgages can be 15 or 30 year fixed rate loans or adjustable rate mortgages.

Joseph

jaysinrd asked:


I am buying a home and its with an FHA loan. The monthly payments will be easy for me to pay but I think I can rent it out for way more then the mortgage payments. So I am thinking about renting it but under FHA loans its supposed to be owner occupied. Do they come and check up on you, will they ever even know or find out? What really can they do if I am making all the monthly payments?

Catherine

Anthony Frankson asked:




Explanation: Mortgage Types – Fixed Rate Mortgages

The basic mortgage has always been the 30 Year Fixed Mortgage. With this type of mortgage you get an interest rate that stays the same (fixed) for the entire length of the term. What this means is that you can count on paying the same monthly payment for the next 30 years without any “surprise” increases in the amount. You know what your payment will be each month and you can make your budget accordingly. There are now 15, 10 and even 5 year fixed mortgages but they come with a hefty monthly payment.

Explanation: Mortgage Types – Adjustable Rate Mortgage

Another mortgage example is the Adjustable Rate Mortgage or ARM. This type of loan adjusts to the fluctuations in the interest rate that is determined by certain market forecasting indexes. The interest rate of this loan is initially lower than the fixed rate but after the introductory period the loan then begins to fluctuate. This is a good choice when interest rates are low but can be burdensome when interest rates are high. One disadvantage of these loans is that you cannot predict exactly the monthly payments because they are subject to change.

Explanation: Mortgage Types – Convertible Mortgages

Convertible Mortgages are another example. This is a kind of hybrid of the fixed and adjustable mortgage. This is popular because it has flexible options; when rates are high you can convert to the fixed rate and when the rates are low you can convert back to the adjustable rate. This loan has other names such as Reducing Interest, Reduction Option, etc.

Explanation: Mortgage Types – FHA and VA Loans

The final two mortgage types are for special social categories. The FHA Loans by the Federal Housing Authority guarantees the repayment of loans made by private lenders to low and moderate-income level populations. VA Loans, by the Veterans Administration, guarantees the repayment of funds made by private lenders to qualified veterans who have served in the United States Armed Forces and the National Guard.

This is just a simple basic overview of the mortgages available today. With the above information you must now begin to get much more extensive information on the specific features that fit your particular situation best. The Internet is your best source for finding out this information because it allows you to make comparison rate shopping very easily.

The Internet is also the best resource for finding a lender with whom you can do business. Be sure to have an in depth discussion with your lender about the particular loan you are getting before you sign any papers binding you to a contract. Remember, never sign a contract if you any doubt about the terms of the mortgage agreement that is presented to you.

Jamie