With hundreds of other types of loans available, you may ask what is the best loan for me? Thats hard to say since it depends on your goals, expectations, and finances. An experienced loan consultant can assist you by asking the right questions for your particular needs. Click here and we'll send you a quick questionaire that will assist you with the type of questions needed to determine the best loan program for you. Act now to get you started on the right foot!
Loans that have the same interest rate for the full term of the loan.
These loans can be FHA, VA or Conventional. Rapid Payoff Mortgage amortizes quicker than the standard 30 years.
These loans include 10-year and 15-year loans. Bi-Monthly Mortgages are paid twice per month so that the loan will
be paid off quicker. The benefit to you is the savings on interest, the
disadvantage is a slightly higher payment. Mortgages which are tied to an index, and in which the interest may
rise or fall, depending on that index. ARMs are available in 6 month, 1
year, 3 year, 5 year, and even 10-year variations.
Adjustable Rate Mortgage with Conversion Option Same as a regular ARM, but for a fee, you retain the ability to
convert the loan to a fixed rate within a set period. A mortgage which consists of the PITI, known as Principal, Interest,
Taxes and Insurance all in your monthly payment. A graduated payment mortgage gradually increases (at set increments)
for a certain period. GPMs can be for 1 year, 2 years, or even 3 years.
These loans allow for a buyer to ease into a higher payment over several
years. Watch out for Negative Amortization or Deferred Interest when
dealing with these loans. This special type of loan has a fixed interest rate for 30 years but
a slight increase in the payment (3%-8%) is applied directly to the
principal. This allows the loan to be paid off in 13-15 years. Temporary Buy downs These loans have a temporary period where the interest rate is lower than the fixed rate for the whole term. Normally, these temporary buydowns can be a 3-year, 2-year, or 1-year program. It is a good way to ease into a payment without jumping into a high payment right away. Temporary buydowns are used most when interest rates are high. This is also a good deal if you’re relocating and can get your employer to pay buydown fees as part of your relocation benefit. Permanent Buy downs These loans are also bought down to a lower interest rate,
but the special interest rate is good for the entire term of the
loan. An agreement to purchase a property with a lease for a set period of
time. Although many people think that they will save money, this can be
a costly proposal since a security deposit and earnest money check may
be required. An agreement to lease with the possibility of a purchase at a later
date. A mortgage in which a part of the work needing to be done is repaired
by the buyer. The seller, then gives the buyer a credit for the work
towards his downpayment. This type of arrangement is not used as often
today as it used to be. This type of mortgage has a large payment due (the rest of the loan)
at a set time in the term. An example might be a loan which looks like a
30 year fixed, but actually will only last for 5 years. At the end of
the the 5 year term, you must pay it completely or refinance the
outstanding balance. The advantage to this type of loan in the current
market is for those individuals that know they will probably be
transferred in the short term. This mortgage allows that type of buyer
to pay a lower interest rate because balloon mortgages typically have a
rate lower than market as an incentive. Purchase Plus Improvements Mortgage A mortgage to purchase a property and include the needed repairs. This Specialty loan does not require your income to be verified. It
does usually require a large downpayment and a higher interest rate. If
you are in a profession that the income is hard to track, this might be
a valuable alternative for you. These are listed here because the down payment requirement is only
3%, and HUD will pay most of your closing costs (up to 5% of the
salesprice). These are listed because many people believe that these foreclosures
are only available to veterans. That is not true. An advantage to these
foreclosures is that if you bid what Va is asking, there is an added
benefit to you. Many of the Va foreclosure have been updated and repairs
done. The main disadvantage is that there are not many of these
properties available. Special loans for the non-occupied real estate owner. If you plan on
purchasing property to fix up and resell, or if you want to be a
landlord, this is the type of loan you’ll need. Usually requires 10%
down. A temporary loan used to "bridge the gap" while you sell
your previous home and buy your new home. This type of loan takes
advantage of the equity position in your property so that you’ll have
the funds to purchase your next home. A type of loan used to provide the funds to build your home. This
type of loan is temporary because it will be paid off by the permanent
loan on your completed property.
Many times a second is required to get your financing approved; the
following list may help with the sources and what to expect. Used in conjunction with a primary lender, many companies offer
a second mortgage to assist the purchaser in obtaining a loan
known as a 75/15/10 (see 80/10/10) loan. These loans will be for a
shorter term than the first lien, and for a slightly higher
interest rate (approximately 1.5% higher) An individual investors may be willing to take a second
mortgage on a case by case scenario, but beware, the interest rate
may be considerably higher. The most common of the sources for a second lien (also known as
a seller second) occurs by the seller. Typically, the seller is
interested in selling the property and can be induced into taking
the second by an attractive interest rate. This type of mortgage, often used by investors, covers more that one
property. A special type of mortgage which includes the real property, as well
as, personal property (like furniture, for example). These types of loans are held in the lending institution’s
portfolio. Since the lender will be keeping the loan for the entire term
and not sell it to the secondary market, the lender may ease a
requirement,.
A wraparound encumbrance occurs where a new mortgage is originated
around an existing loan. Payments are made to a third party, and that
third party pays the original note. You should be aware of the due on
sale clause which could make this type of mortgage financing a problem. Contract for Deed/Land Installment Contract Another troublesome type of financing for a potential buyer is the
contract for deed. This type of loan is a seller financed mortgage, but
the seller retains the title until the mortgage is completely paid off.
As a buyer, this is not a good option for you. Whenever a seller owns the property clear of any liens, he may decide
to make the loan to you. He may still require a down payment, but he may
offer an attractive rate. A buyer may decide to take this type of
mortgage if his credit is damaged or his income is unverifiable. Assumable loans come in 2 variations, qualifying and non-qualifying.
An assumable loan is when a potential buyer pays the seller for the
equity in their property and continues to pay the house payments to the
lender. With qualifying loans, the new buyer must still meet the regular
requirements for that type of loan. Non-qualifying loans, requires no
qualification of any kind. The disadvantage of this type loan is that
they have quit making them, and therefore, the downpayment portion is
usually very large. Loans can be obtained from mortgage brokers which cater to people with credit problems. With as little as 10% down, the mortgage broker can find investors willing to take the risk on loans to people with special needs. B-Credit: Reasonably good credit. Mortgage current; 2 to 4 times 30 days late or 1 time 60 days late during the past 12 months. No bankruptcy in last 2 years. Reestablished good credit since negative rating. C-Credit: Significant Credit Problems. Demonstrated some willingness to pay. Slow mortgage 6 times 30 days late + 1 time 60 days late, or 1 time 90 days during the past 12 months. No bankruptcy in past 18 months.
E-Credit: Equity Loan. Consumer credit not established. Maximum 75%
LTV. Bankruptcy, or currently in foreclosure.
When you are short on cash, this financing technique is very helpful.
The lender will charge you a slightly higher interest rate, but will pay
for some of your closing costs. Trades and Exchanges are another method of acquiring real estate. The
most common method is called a 1031 Tax-free exchange. This allows
owners of properties (usually investors) to swap like-kind properties to
avoid paying gains, and take advantage of the depreciation clock. Use a
specialist for this type of transaction. A type of loan used to avoid paying private mortgage insurance (PMI).
The first number (80) refers to the first lien which is 80% of the loan
value. The second number (10) refers to a second lien for 10% of the
value, and the last 10% is the downpayment. The new loans are actually
now quoted as 75/15/10 or 75/20/5.
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