Conventional loans are loans that meet the guidelines set by Fannie Mae and Freddie Mac. These loan types are for people who fit standards including a high credit score and great credit score history. Eligible borrowers will have a good amount in savings or liquid assets to use to put down on a mortgage loan. These loans offer great rates and loan terms, but have more strict eligibility requirements than other loan types. These loans are for credit rock stars!
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Fixed-Rate Mortgage vs Adjustable-Rate Mortgages
When applying for a mortgage loan, you will need to decide which rate will best suit your needs. A fixed-rate mortgage is beneficial for borrowers who prefer a secure interest rate and payments that will not fluctuate based on market interest rates. An adjustable-rate mortgage can be beneficial for borrowers who prefer a mortgage rate that will change with the market, such as a borrower who is obtaining a loan at a time when market rates are high. There are also loan options with a hybrid of fixed-rate and adjustable-rate (ARM).
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The Federal Housing Administration mortgages are ideal for borrowers who do not meet the eligibility requirements of conventional loans. These mortgage loans require a lower down payment and have a credit score requirement of 580. The FHA 203k loan option is great for borrowers who wish to finance the purchase of a home and get additional money to renovate, remodel, or “fix up” the home they are purchasing.
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The Home Affordable Refinance Program 2.0 is great for borrowers who are interested in refinancing their home that they purchased on or before 5/31/2009. Harp 2.0 gives homeowners that are up to date on their mortgage payments, but have minimal equity in their homes, the ability to refinance their mortgage if they owe an equal or greater amount than their home is actually worth at that point in time. You must have a mortgage loan that is backed by Fannie May or Freddie Mac and the loan to value must be greater than 80%, with the borrower having no late payments in the past 12 months.
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These loan types are great for borrowers who need a larger loan amount than what is set by standard guidelines of a conventional loan. In some areas of the country, property values are very high. Even though you may have a lot in savings for a down payment, you still may need a loan exceeding that standard amount. Jumbo loans are great for people who are faced with this situation.
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The VA loan is ideal for service members and veterans. With a VA loan, typically little to no down payment is required and the interest rates on these loans are low. This loan offers service members and veterans a way to purchase a home with monthly payments that are affordable. Thank you for your service.
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