PURCHASING LOANS
DOWN PAYMENT ASSISTANCE
Down payment, is an initial up-front partial payment for the purchase of a house. It is usually paid in cash or equivalent at the time of finalizing the transaction. A loan of some sort is then required to finance the remainder of the payment. Down payment assistance comes in the form of grants, loans and other programs. It’s typically reserved for first-time home buyers only.
FHA LOANS
FHA Loans are backed by the Federal Housing Aministration. FHA allows first time homebuyers to put down as little as 3.5% and receive up to 6% towards closing costs. These loan have historically They have historically allowed lower-income Americans to borrow money to purchase a home that they would not otherwise be able to afford.
VA LOANS
The basic intention of the VA home loan program is to supply home financing to eligible veterans and to help veterans purchase properties with no down payment. Guaranteed by the United States Department of Veterans Affairs (VA). The program is for American veterans, military members currently serving in the U.S. military, reservists and select surviving spouses (provided they do not remarry) and can be used to purchase single-family homes, condominiums, multi-unit properties, manufactured homes and new construction.
CONVENTIONAL LOANS
Conventional Loans are not offered or backed by a government organization. These loans are made available through private lenders, or possibly two government sponsored enterprises: Fannie May and Freddie Mac. It is also likely that Conventional Loans will require a higher credit score in order to qualify. The benefit to the borrower is a quicker time to loan closing, along with typically lower mortgage insurance premiums, and sometimes no mortgage insurance is required. For many people, conventional is the way to go.
USDA
The U.S. Department of Agriculture (USDA) guaranteed loan is one of the most affordable programs available to Americans today. Typically, they require no down payment, meaning that it is possible to finance up to 100% of the property value. To be eligible, one must be purchasing a property in a rural area, as defined by the USDA. The home or property that the potential buyer is looking to purchase must be owner-occupied; investment properties are not eligible for USDA loans.
JUMBO LOAN
The primary advantage of a jumbo loan is that it allows borrowers to take out a mortgage that exceeds the limits put in place by the FHFA. Approval requires a stellar credit score and a very low debt-to-income (DTI) ratio. If you’re looking to purchase a high-value property, it’s likely that you’ll need a jumbo mortgage. While jumbo mortgages used to carry higher interest rates than conventional mortgages, the gap has been closing in recent years.
REFINANCING
CONVENTIONAL CASH-OUT AND NO CASH-OUT REFINANCE
No-cash-out refinancing usually changes the loan term, the interest rate on the mortgage, or both. The aim usually involves saving money on the home loan, but you won’t be able to receive a cash-back. Cash-out refinance provides a cash lump sum at closing. The money is made available from home equity. The interest rates for cash-out refinance are usually higher than the no-cash-out loans, and it is also a bit more difficult to qualify. Some uses for getting a cashout include:
-Paying for home maintenance or renovations
-Buying an investment property or second home
-Funding a new start-up business venture
-Paying off high interest debt
FHA CASH-OUT AND NO CASH-OUT REFINANCE
The FHA cash-out refinance works like other cash-out refinance loans. If you owe $200,000 on your mortgage, for example, then you might get a new loan for $225,000. You use $200,000 of it to pay off your previous loan, and the $25,000 balance is yours for your home improvement project. FHA loans are good for people with lower credit scores and are more lenient about debt ratios than other loans. An FHA cash-out refinance allows you to borrow money to improve your home at today’s low interest rates by using the equity built up in your house.
FHA STREAMLINE
FHA Streamline applies to those with an FHA Loan who want to decrease their monthly mortgage payments. As suggested by the name, this product offered by the Federal Housing Administration is relatively speedy and simple.