Which loan works for you?
CONVENTIONAL FINANCING: A conventional loan is a mortgage loan, which is not insured or guaranteed by any agency of the state or federal government. Many years ago, the only loans available for housing were conventional loans with very short terms of 3-5 years with balloon payments and high down payment requirements of as much as 50% down.
FHA LOANS: FHA loans have a lower down payment requirement than conventional loans, but higher than VA loans. FHA has a more liberal qualifying formula than on conventional loans but not as liberal as VA loans. FHA loans made before December 15, 1989 are fully assumable and can be creatively financed. Loans made after December 15, 1989 can be assumed at the same interest rate with qualification. FHA is more lenient on properties that are older or are located in undesirable neighborhoods. Disadvantages- county loan limits may be inadequate in high cost areas. Appraisals may contain more repair requirements than conventional loans.
VETERANS ADMINISTRATION (VA): The VA loan program for owner-occupied housing is one of the best loan programs in the free world. It is possible for a veteran to obtain 100% loans up to the current loan limit with absolutely no down payment, and the seller or builder is allowed to pay all of the veteranÕs closing costs, making the total cash required to purchase, in some instances, zero. If the veteran desires higher priced homes, he generally is required to make a down payment on the amount exceeding the current guaranteed loan limit. Generally, the Veterans Administration is a little more liberal than conventional lenders would be with regard to the veteran's credit standing and qualifying for the VA loan, although recent VA underwriting changes make the qualifying criteria similar to conventional mortgages.
ALTERNATIVE LENDING: Alternative Lending is geared more toward marginal credit consumers and in most cases, if available, results in higher rates, ARMs, and/or pre-payment penalties. Please make sure you understand all terms if you have to utilize an Alternative Lending type financing.
JUMBO LOANS: Loans in excess of FNMA / FHLMC limits are called Jumbo Loans and often carry higher interest rates and points. Larger down payments are also required on these loans
