Thanks to fund the purchase of your home is the most common is the need to understand different types of loans.
Types of mortgages:
1. Conventional Loans:
· Compared with the loans in accordance with the guidelines established by Fannie Mae and Freddie Mac, the loan amount, first payment, the required credit score and income needed. They represent the most favorable conditions.
• It is not compatible, do not meet the guidelines mentioned above, higher interest rates and may require PMI (mortgage insurance).
2. Government bonds are given: these loans are managed by a government agency and are designed to require a small deposit and easier to access. They are guaranteed by Ginnie Mae, which is part of HUD (Housing and Urban Development).
· Give FHA: Federal Housing Administration managed by a division of HUD requires mortgage payments at 3.5%, including principal, interest, insurance, taxes and PMI over 31.5% of monthly gross income individuals to obtain the loan. She and a loan maximum allowed by law.
· Give VA: is guaranteed by the Department of Veterans Affairs, usually without a down payment. The legal limit for the amount of loan is typically $ 203 000 and to qualify, you must be a veteran or a person in military service.
ERS · Take: approved by the Ministry of Agriculture for the rural population in general, no down payment and closing costs are minimal.
3. Type B or C paper (bonds): these loans on less favorable terms and are used as a temporary remedy until the borrower can qualify for a loan first.
Boom · 3.27 and ARM 2 / 28: These loans have an amortization of 30 years with 2 or 3 years (respectively) at a fixed rate and variable rate for the remainder. You can also a balloon payment clause in the years 50-10, as they are intended as a temporary measure.
4. Private Financing: owner, acting as a lender. These funds are primarily used when the buyer can not qualify for any of the above types of loans, or to prevent the qualification process. In general, the seller retains title and the contract used the so-called “contract writing.” The alert is sent when the debt is paid from a refinancing loan of the types defined above.
5. Instalment: If owner financing is not available, and then hire the best option. Usually used two different contracts, a lease and purchase option granted by the holder of an option. This option allows you to buy the property at an agreed rate for a specified period of time. There is usually a clause that the possibility of a renewed after its expiry if they are not willing to buy at the time permits.
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