|
FHA Loans: |
|
The FHA was created back in the mid 60's by the Department of Housing
and Urban Development. Unlike more stringent mortgage programs, the FHA Mortgage is more attainable
for people with little or no credit. This is a key factor in why people choose an FHA loan over a
conventional mortgage loan. In addition, FHA Loans have a lower minimum income requirement and
the insurance related to taking out an FHA Mortgage is usually less than a typical mortgage.
There are limits on the amount one can get with an FHA loan, so it is important your review
your states limit when it comes to FHA mortgages. |
| Conventional Loans: |
|
A conventional mortgage means that
your mortgage is not insured by the federal government. A
conventional loan is generally defined as a mortgage with equal
monthly payments, a 30-year term, and a fixed interest rate
established when the mortgage is created A conventional mortgage is
also defined in terms of its "loan to value" ratio or LTV. An 80
percent LTV is the standard for conventional loans, a percentage
which means that if a house costs $100,000, the lender will provide
financing worth $80,000 (80 percent of the purchase price) and the
borrower will put up $20,000 (20 percent |
| Rural Housing Loans: |
Borrowers in rural areas have easier
access to affordable housing thanks to Fannie
Mae Its features include:.
|
 |
Fixed-rate loan with a 30-year
repayment period. |
|
No down payment required for low-
and moderate-income buyers. |
|
No cash reserves required after
closing. |
|
For Guaranteed loans, the borrower’s
income must be at or below 115 percent of
area median income. Borrowers assisted by the program cannot be
eligible for conventional financing.
|
|
For Leveraged loans, the
borrower’s income must be at or below 80 percent of area
median income, and cannot be eligible for conventional financing.
|
|
Eligibility is limited to
rural areas. |
|
Eligible properties include
single-family, non-farm, owner-occupied principal
residences, including condominiums, planned unit developments, and
new
manufactured housing units
|
| Sub Prime Loans: |
|
A loan for the less than
perfect credit, self employed, not able to verify income etc. These
loans have higher rates and more onerous terms than conventional
loans, but they can help bruised-credit borrowers reap the benefits
of homeownership just like their more creditworthy cousins. Anything
below A-minus credit score is considered a sub prime loan. In
addition to paying higher interest rates, sub prime borrowers often
pay heftier fees at closing, higher late-payment fees, prepayment
penalties and credit life insurance so that the bank gets paid if
the borrower dies. |
| Pro: Opportunity
for those who can't prove income, have low credit scores,
bankruptcies, too much credit or need a higher-than-normal
loan-to-value ratio on property. |
| Con: No
consistency. Rates, fees and underwriting guidelines vary
drastically. Borrowers need to shop more to find best rate |
| |
|
|
.jpg)
