LOAN TYPES

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    Conventional Loan

      A conventional loan is a loan that is not insured by the government. Conventional loans appear in an assortment of sizes and terms, and may emphasize either fixed or adjustable interest rates. Conventional loans can either be conforming or non-conforming.

 

 

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  Government-backed Loan

A government-backed loan is insured, either exclusively or fractionally, by the U.S. government.

 

 

Examples of Government-Backed Loans

FHA Loans:  FHA Loans are favorably prominent among first-time home buyers but are applicable to any individual who qualifies. They present competitive rates, flexible credit requirements, and low down payments.

VA Loans: VA Loans are attainable to qualified veterans and their spouses. They present low down payments and complimentary interest rates.

FHA Loan and Mortgage

Home buyers are not entrusted money from the FHA. Instead, it secures loans created by lenders such as banks.

Comparison: Conventional vs FHA Loan

The qualifications for an FHA Loan is as follows:

1) The maximum credit score required is 620.

2) The maximum percent of home price an individual can borrow is 96.5%.

3) The funding fee for an FHA Loan is 2.25%.

4) An additional fee for Mortgage insurance is required if an individual owes more than 78% of the home price on a loan, and for a minimum of five years after an individual receives a loan.

5) FHA Loans come with an additional appraisal.

 


 

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    Conforming Loan

A conforming loan is applicable to established guidelines as decided upon by Fannie Mae and Freddie Mac. The widely accepted of these guidelines is the capacity of the loan; in most counties in the United States, the paramount size of a conforming loan is $417,000.

 

non_conforming.jpg    Non-Conforming Loans

    Non-conforming loan are given to borrowers who do not qualify for conforming loans.

 

 

There are various types of non-conforming loans such as the jumbo loan.

jumbo_loans.jpg Jumbo loans are too extensive to accommodate the guidelines of a conforming loan. For example, if an individual is purchasing a home in a county in which the conforming loan limit is $417,000, and that individual is obtaining a single mortgage for $500,000, that individual will require a jumbo loan.

 


 

fixed.jpg   Fixed Rate Mortgage   

With a fixed-rate mortgage, the interest rate for an individual's loan is equivalent on day one as it is on the day you pay off the final payment, whether that's in 5, 15, 30 years, or more.

 

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Adjustable Rate Mortgage

With an adjustable-rate mortgage, or ARM, your interest rate will be adjusted at certain intervals during the time of your loan. If an individual begins with a 6$ loan, that interest rate is able to increase to 7%, 8%, 11%, or even higher possibly within a short amount of years.

 

 

 

Contact Info
Hanu Reddy Realty

Hanu Reddy Realty

16251 Laguna Canyon Rd. #100
Irvine  California 92618

Office: 949-450-8800 CA BRE Lic. 00873745 Email: info@hanureddyrealty.com

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