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Home Mortgage
Home Mortgage is a residential mortgage secured by a
one-to-four-family property.
Home Mortgage Loan programs come in many forms and from many
sources. Just as the loan structure, like a 30 year fixed rate mortgage, can
affect your interest rate and monthly payments, the source of funding for
your Home Mortgage Loan can also affect your rate and payments.
Home Mortgage Loan Lenders generally require minimum 3% of the loan
amount as a down payment. If you can affords 3%, you may consider the most
common type of home mortgage loan, which called:”
conventional Loan”. These
loans consist of conforming loans, which are secured by government-sponsored
entities such as
Fannie Mae and Freddie
Mac. If you need a “Jumbo” home mortgage loan then you need to contact
to private investors or regular Banks.
Conforming home mortgage loans are funded by
Fannie Mae (FNMA) and
Freddie Mac (FHLMC).
These companies do not lend money directly to you, but work with lenders
across the country to offer home mortgage loans to meet your needs. As a
secondary market for mortgage loans, they purchase mortgages from lenders
and package them into securities that can be sold to investors.
If you are looking for a large home mortgage loan amount to purchase or
refinance, you could consider a jumbo home mortgage loan, which has a higher
loan amount limit than the limits set by Fannie Mae and Freddie Mac. Because
jumbo home mortgage loans cannot be funded by these two agencies,
they usually carry a higher interest rate.
The Federal Government and state, local and private entities have developed
programs to help you purchase a home with a low down payment. If you are a
first time homebuyer or have low to moderate income, you may be eligible for
a home mortgage insured by the
Department of Housing and Urban
Development (HUD) through the
Federal Housing Administration
(FHA). While FHA does not make or buy loans, they insure FHA loans so
that if you default on the loan, the lender will get reimbursed. You may be
able to get an FHA loan with a low down payment of only 3% of the loan
amount or less. While there are limits to the size of FHA loans, they are
generous enough to handle moderately priced homes almost anywhere in the
country.
If you are a veteran or qualify by military service or other entitlements,
FHA mortgage insurance can also be combined with a guarantee from the
Veteran's Administration. VA mortgages were created to help veterans achieve
the American dream and buy their own homes. VA loans offer low to no down
payments with many of the same benefits as an FHA loan.
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No Down-payment Home Mortgage Loan
- (100% Financing) -- 80/20 Option
The main advantage of this type of loan, also known as 100% financing, is
the ability to buy a home with almost no money down. If you have a strong
credit profile but have limited funds to commit to a down payment, 80/20
mortgage might be right for you. Lenders typically require a down payment of
at least, 3 to 20 percent of the purchase price. If the loan amount is for
more than 80 percent of the purchase price, private mortgage insurance (or
PMI) is usually required.
You can avoid paying PMI by getting a second mortgage ('piggyback
loan') to back up your first mortgage. The first mortgage is provided for 80
percent of the cost of the home mortgage and the 'piggyback' second mortgage
is for the remaining 20 percent. The 80 percent first mortgage (home
mortgage loan) can be a fixed-rate (15-years or 30-years), adjustable-rate
(usually 5/1, 7/1 or 10/1 fixed period ARM) or interest-only loan.
The 20 percent second mortgage can be a home equity line of
credit that changes with the prime rate. Combined, the two loans allow you
to purchase 100% of your home with no money down.
How About
the Bad Credit?
If you have bad credit, you may not qualify for a conventional loan. In this
case, you could consider a sub prime loan. Like other loans, sub prime loans
come in many forms based on the terms, loan amount and loan to value ratio
you are looking for. In addition companies will look at your credit and give
you a credit grade, which will help them determine the best loan for your
situation. With less than perfect credit, you can expect to pay higher
interest rates because of the higher risk associated with making a loan to
someone with a poor credit
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