Types of Mortgages AvailablePosted by Nick Niesen on October 29th, 2010 Types of Loans
Conventional loans generally are considered loans with loan amounts at or under the maximum loan amount available for purchase by Freddie Mac or Mannie Mae. Fannie Mae is the common name of the Federal National Mortgage Association. Fannie Mae is a congressional chartered, shareholder-owned company that buys mortgages from lenders and resells them as securities on the secondary home mortgage market. Before approving you, Fannie Mae looks at a number of factors including credit ratings, debt ratio, and employment history. Freddie Mac Freddie Mac is the common name for the Federal Home Loan Mortgage Corporation. The 2006 maximum loan amount for both Fannie Mae Mortgage and Freddie Mac company is $417,000. Freddie Mac does not issue mortgages directly, rather, they buy mortgages from lenders and resell them as securities on the secondary mortgage market. Before approving you, Freddie Mac looks at a number of different factors including credit ratings, debt ratio, and employment history. Government guaranteed loans. FHA, VA loans. A VA (Veterans Affairs) mortgage carries many of the same advantages as an FHA home mortgage. However, to qualify for this mortgage, you must be a qualifying veteran, the unmarried widow of a veteran, or an active-duty serviceman. Talk with your mortgage broker on maximum loan limits, required down payments (if any) and what your funding fee will be. VA loans do not have a mortgage insurance payment, instead borrowers pay a one time fee for their "insurance" What percent of the loan amount varies, currently it will not exceed 4%. These are different than origination or discount points. Non-Conforming / Jumbo mortgage are loans where the loan amount is greater than the conforming loan limit. $359,650 currently for a single family. So if you need to borrow $500,000 to purchase your new home, it will be a jumbo loan. Jumbo loans typically have interest rates slightly higher than conforming loans, about 1/2 percent higher. If you will be borrowing this much money you should ask your broker if you could split up your loan into a 1st. and a 2nd. mortgage to avoid needing a jumbo loan and avoid the increase interest cost. A mortgage broker can help you find the best rate and product to fit your situation. Ask them about what are your options. Like it? Share it!More by this author |