Home loans are never one size fits all. There are several mortgage home loan types to choose from when you buy or refinance a mortgage, so it is important to fully understand the advantages and disadvantages of each type before you make a decision. The type of mortgage that you choose will have different requirements that will influence your rate, the length of the loan, and your lender.
The Federal Housing Administration (FHA) is managed by the Department of Housing and Urban Development (HUD). The borrower must have mid-range to good credit, sustained employment, and income history. This type of loan is perfect for the buyer who wants to put less money down, get lower rates and flexible terms, and is easier to get qualify. FHA offers low down payments as low as little as 3% down. Private Mortgage Insurance (PMI) payment is required for the life of the loan, and it must be a primary home.
Conventional Loans are one of the most secure loan programs that are not insured or guaranteed by the federal government, which makes them different from programs like VA, USDA, and FHA. The borrower must have good credit, sustained employment, and income history. Down-payment is as low as 3% and lower mortgage insurance costs than FHA loans. However, there is no monthly private mortgage insurance (PMI) with a down payment of at least 20%. Mortgage insurance is cancelable when home equity reaches 20% (unlike with the federal government-backed FHA loans). Conventional loans are for a primary residence, a second home, or for a rental property. It offers fixed rates, adjustable rates (ARMs) with loan terms from 10 to 30 years.
VA Loans are insured by the U.S. Department of Veterans Affairs (VA) and are guaranteed home loans for military service members, veterans, and eligible surviving spouses to become homeowners. Borrowers can finance up to 100% of the loan amount without a required down payment. There is no Private Mortgage Insurance (PMI). The upfront funding fee can be including the loan amount. These loans usually have lower interest rates, lower closing costs, and the seller can pay all the closing costs in most cases.
A Jumbo Loan is a mortgage used to finance properties that are too expensive for conventional conforming loan limits. Jumbo loans are not guaranteed by Fannie Mae and Freddie Mac, meaning the lender is not protected from losses if a borrower defaults. Jumbo loans are typically available with either a fixed interest rate or an adjustable rate, and they come with a variety of terms.
Some lenders classify jumbo loans as riskier so a borrower must have a high credit score and healthy financial reserves. A higher down payment is usually required to secure financing for a larger home.
USDA Loans are zero-down-payment mortgages for rural homebuyers insured by the United States Department of Agriculture. They are for borrowers who are not wealthy and can’t get a traditional mortgage.
USDA loans allow you to get low mortgage interest rates, even without a down payment. Regardless of the down payment, you will still have to pay a mortgage insurance premium.
Bank Statement Loans are often a great mortgage choice for eligible self-employed homebuyers to buy or refinance a home. This product allows 12 or 24 personal or business bank statements to calculate income without requiring tax returns. It is available for home loan purchases and cash-out, rate and term refinance. It can be used on primary, second homes, or investment properties.
It is ideal for buyers who earn seasonal income, independent contractors or are self-employed workers. Note that, not all self-employed borrowers will qualify. More documents may be required for eligibility than traditionally loans.
A non-qualified mortgage loan is more commonly referred to as a Non-QM loan. Not every borrower can qualify for a traditional government matrix, investors, foreign nationals, and those who are self-employed, as well as borrowers with credit blemishes, such as foreclosures, low credit scores, or prior bankruptcies, may find it difficult to qualify for a conforming conventional loan. That’s where a Non-QM loan can be helpful. In fact, these types of loans are extremely popular in today’s real estate growing market.
A Non-QM loan can be the solution to help a borrower achieve the American dream of homeownership. These types of loans have different underwriting guidelines than conventional or government-backed loans. Non-QM loan lending guidelines follow regulatory guidelines while considering a borrower’s Ability to Repay (ATR), according to the loan’s terms.
Bank Statement Loans.
Jumbo Loans with 10% Down.
No Income Investment Loans.
Asset-Based Loans.
Foreign National Loans (ITIN)
Interest-Only Home Loans.
Recent Credit Event Loans.
Commercial Rental Property Loans.
A Reverse Mortgage Loan is for homeowners over the age of 62, and up in large home equity looking for cash flow from their home. This type of loan is especially appealing to people who want, or need, to supplement their retirement funds. The homeowner can borrow money from a lender against the value of their home and receive the funds as a line of credit or monthly payments.
You will not be required to make monthly payments on the reverse mortgage because the loan balance does not come due until the final borrower moves, sell their home, passes away, fails to pay taxes or insurance, or neglects to maintain the home.
Working with Procmyloan Mortgage Loan Originators can make a huge difference when buying a new home. We will ensure that the process is as easy and seamless as possible, removing the stress so you can focus on more important things.
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