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Major
Types of Loans:
FHA
Loans - These mortgage loans are
granted by approved local lending
institutions.
The loan is insured to protect the
lenders by the Federal Housing
Administration (FHA) which operates under
the Department of Housing and Urban
Development (HUD).
Although FHA insures the loan for the
lender, the borrower pays the insurance
premium.
VA
Loans
- These mortgages are 100% loans granted
only to eligible veterans or their
surviving, unmarried spouses if the veteran
died while on active duty or as a result of
a service connected disability.
Although there is normally no down
payment for the veteran, he/she will be
liable for a loan origination fee plus a
funding fee.
RECD
Loans
- The Rural Economic and Community
Development Administration (RECD) loans,
previously known as the Farmer Home
Administration (FMHA) loans, is a federal
agency of the Department of Agriculture.
Loans are made for low and moderate
income families, and the payments and
interest rates will be based on the
borrower’s income.
Conventional
Loans
- These mortgages are not insured or
guaranteed by the government.
The normal down payment is 20% of the
sales price.
However, a lower down payment may be
accepted if a private insurance company will
insure the loan up to the normal down
payment required by the lender. This
type of insurance is called Private Mortgage
Insurance. When qualified, there are also
100% conventional loans available without
Private Mortgage Insurance.
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Compare
at least 2 lenders. Look
at different loan programs, interest
rates and closing costs/fees.
If needed, I will give you names
of local lending institutions.
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Don’t
focus solely on the interest rate.
Getting a low rate is important,
but you won’t benefit from it if you
have to pay too many up-front points and
other fees.
To
improve your chances of getting the loan
approved,
take note of the
following:
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