FHA * VA * Conventional * Sub-prime FHAHUD insures mortgage loans to help people buy or refinance their current homes with a low down payment. HUD doesn't give you the loan directly. Local HUD-approved lenders can fit you to one of HUD's programs. HUD's FHA Loan Available for owner/occupants only. If you meet FHA’s credit qualifications, you may be eligible for a low down payment of 3.5%. On a $100,000 home, that's a down payment of $3,500, compared with $10,000 - $20,000 for most conventional loans.HUD-insured loans are available for single-family homes and 2-4 unit properties. For condominiums, the entire project must be approved by HUD. New rules regarding condos are in effect Oct. 1, 2009. There is no pre-payment penalty for early or accelerated pay-off of the loan. HUD-Insured Reverse Mortgages for Elderly Homeowners HUD provides mortgage insurance to homeowners over 62 years old who want to convert the equity in their homes into monthly income and/or a line of credit to be repaid when they no longer occupy the home. Down payment assistance programs. There are government programs for West Valley City, Unincorporated Salt Lake County, South Salt Lake, West Jordan and Utah Housing. These are generally reserved for first time homebuyers who make less than the median income in their area. The State, County, and City backed Down Payment Assistance programs are typically secured by a second mortgage. Some of these second mortgages may be "silent" meaning no payment is required initially and some of the programs forgive the loan after 10-20 years of living in the home. Private sources for assistance can no longer come from Non-Profit entities such as Nehemiah, Hart and Neighborhood Gold, to name a few. These programs will typically require the assistance of the home seller in order for the buyer to take advantage of the program. They also typically do not have a repayment schedule nor is there a second mortgage required. These types of programs went out of favor as the sub-prime market evolved in the 2004-2006 mortgage market. Adjustable rate or fixed rate? Fixed rate loans give you the assurance of level payments. Adjustable rates start at a lower rate and can go up or down over the years based on market conditions. There are caps to increase your interest rate of 1% per year and 5% over the life of the loan. It is easier to qualify for a loan at the lower initial rate but be prepared to have the resources necessary to make higher payments as your interest rate increases. |
VAAside from the veteran's certificate of eligibility and the VA-assigned appraisal, the application process is not much different than any other type of mortgage loan as they are made by a mortgage lender. A GOOD DEAL FOR VETERANS - More than 29 million veterans and service personnel are eligible for VA financing. Even though many veterans have already used their loan benefits, it may be possible for them to buy homes again with VA financing using remaining or restored loan entitlement. 1. Most important consideration, no down payment is required in most cases. 2. Loan maximum may be up to 100 percent of the VA-established reasonable value of the property. Due to secondary market requirements, however, loans generally may not exceed $417,000. 3. Flexibility of negotiating interest rates with the lender. 4. No monthly mortgage insurance premium to pay. 5. Limitation on buyer's closing costs. 6. An appraisal, which informs the buyer of property value. 7. Thirty-year loans with the right to prepay loan without penalty. 8. An assumable mortgage, subject to VA approval of the assumer's credit. WHAT IS A VA-GUARANTEED LOAN?VA's guaranty on the loan protects the lender against loss if the payments are not made, and is intended to encourage lenders to offer veterans loans with more favorable terms. The amount of guaranty on the loan depends on the loan amount and whether the veteran used some entitlement previously. With the current maximum guaranty, a veteran who hasn't previously used the benefit may be able to obtain a VA loan depending on the borrower's income level and the appraised value of the property. If you are a Veteran and would like detailed information, go to this website: http://www.homeloans.va.gov/veteran.htm
_____________________________________________________________________________________ CONVENTIONALThere are many variations of conventional loans. They are typically harder to qualify for than government loans (FHA/VA). Credit and income requirements are higher. Down payment requirements are usually at least 10%. If you put more than 20% down, there is no mortgage insurance premium added to your payment. You will hear terms like: LTV, 5% down, 20% down, 80-20, 90-10-10, 3/27, and 7/23. We can recommend experienced lenders who we have successfully worked with in the past. An experienced and knowledgeable loan officer is a vital part of home buying. The loan officer can help you wade through all the options and help you select the loan program that best suits your needs. Adjustable rate loans for good credit buyers generally have rate adjustment caps of 2% per year and 6% over the life of the loan. BEWARE: Be wary of loans with 6-month adjustments and early pre-payment penalties. SUB-PRIME LOANS Because of the high default ratio of these loans, in the summer of 2007, the secondary market has all but closed its doors to this type of financing. Some lenders are still in this market, but very few. These loans were available to buyers with marginal credit or maybe a recent bankruptcy. The interest rates were higher than market rate due to the higher lender risk and often had rate adjustments every 6 months. But, when one is in need of housing, it might have been the only way to go. After the pre-payment penalty term is over (generally 2-3 years) the loan can be refinanced to an “A” paper loan provided credit and income are acceptable. Buyers had the opportunity to buy now and work on cleaning up their credit and refinance later. |