There are some obvious points to look for when shopping for a mortgage lender. The most obvious of them is the best rate possible. Thanks to the internet, it’s now easy to compare mortgage rates in your region online. Though many sites ask for your personal information, you can avoid further harassment and submit a request for a loan rate anonymously by going to the Zillow Mortgage Marketplace at Zillow.com. They’ll provide comparative rates and customer reviews based on your situation. In addition to interest rates, you’ll also want to compare the closing costs and other fees that come along with different loans.
Also, you may be seriously confused by all of the different types of loan programs currently available. Read on for a break down…
FHA Loans
Surely, the above acronym has popped up in your search for a lender. FHA stands for the Federal Housing Administration. An FHA loan is provided by an FHA approved lender. They’re insured loans; a type of federal assistance intended for middle-to-low income households. The program originated during The Great Depression, and due to the slightly different yet similar financial hardships that many Americans are facing during the current recession, it has since been modified.
In a nutshell, FHA loans are more relaxed with requirements from borrowers, and they ask for less down (often as low as 3.5%).
FHA loans cannot exceed the statutory limit (for a single family in the Sacramento region this is approx: $474,950 and for Santa Clara County this is approx: $625,500).
If you want to learn more about FHA loans, go to http://nhl.gov/buying/loans.cfm
Conventional Loans
There are two different types of conventional loans: conforming and non-conforming. Conforming loans follow the guidelines of Freddie Mac and Fannie Mae. The two institutions determine the maximum loan limits. Their loan limits are set annually. In 2008 , the Housing and Economic Recovery Act separated the requirements of “conforming” loans in high-cost areas from loans for other areas. For current loan limits in specified areas, visit http://www.fhfa.gov/Default.aspx?Page=185 for more information.
A non-conforming loan constitutes anything that is outside of the requirements for a conforming loan. For example, if the loan amount is higher than that of a conforming loan, or if anything about the loan doesn’t meet bank requirements, like the type of property.
Other Programs
VA loans are available by the U.S. Department of Veterans Affairs for vets and service persons. Like FHA loans, VA loan programs have favorable terms for those that meet the criteria. While Veterans Affairs does not provide the loans themselves, they do guarantee them.
To find out if you’re eligible for a VA loan visit http://www.benefits.va.gov/homeloans/eligibility.asp
The Rural Housing service, a branch of the U.S. Department of Agriculture also guarantees loans for those residing in certain rural areas (RHS loans). Closing costs are low, and often those who qualify are not required to provide a down payment.
Despite the economic climate, there are loan options out there for most anyone that is serious about buying. Find a reputable lender to discuss your situation with. Assess your situation and decide on a loan program accordingly. Although you may be borrowing money, in the long run you’re making a long term investment. And with any major investment you shouldn’t be hasty. Take your time, do the research and don’t settle.
Courtesy of:
Zillow.com
Hud.gov
CNN Money
Yahoo Real Estate
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