Types of Loans

Loan Explainations

Note: Note all of these loans may be available to you, but the terminology may help understand more when your Lender meets with you

 

ADJUSTABLE-RATE MORTGAGE: LOANS THAT HAVE AN INTEREST RATE THAT IS ADJUSTED AT CERTAIN INTERVALS BASED ON A SPECIFIC INDEX DURING THE LIFE OF THE LOAN.

BALLOON-PAYMENT LOAN: A FIXED-RATE LOAN THAT IS AMMORTIZED OVER 30 YEARS, BUT BECOMES DUE AND PAYABLE AT THE END OF A CERTAIN TERM, MAY BE EXTENDED, OR MAY ROLL OVER INTO ANOTHER TYPE OF LOAN.

BUY-DOWN LOAN: FIXED-RATE LOANS WHERE THE INTEREST RATE AND THE PAYMENT ARE REDUCED FOR A SPECIFIC PERIOD OF TIME BY PASSING THE INTEREST UP FRONT TO SUBSIDIZE THE LOWER PAYMENT.

HOME POSSIBLE PROGRAM: FIXD RATE LOANS, INCOME LIMITATION: 120%-170% OF AREA MEDIAN INCOME IN HIGHT COST AREAS, BUT NO INCOME LIMIT IN UNDER SERVED AREAS. LOW DOWN PAYMENT, FLEXIBLE SOURCE OF FUNDS

CONVENTIONAL LOAN: SOMETIMES MORE LENIENT WITH THE APPRAISAL AND CONDITION OF THE PROPERTY. WHEN YOU ARE BUYING A “FIXER-UPPER” YOU MAY NEED TO USE A CONVENTIONAL LOAN.

FHA LOAN: INSURED BY THE FEDERAL HOUSING ADMINISTRATION UNDER THE DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT. THEY OFFER A LOW DOWN PAYMENT AND ARE EASIER TO QUALIFY FOR THAN CONVENTIONAL LOANS.  OWNER OCCUPIED, UP FRONT MORTGAGE INSURANCE FEE, GIFT ALLOWED, NO INCOME LIMIT

FHA 203 (K) LOAN: REHAB LOAN, GET BIDS FROM CONTRACTORS, SUBMIT BIDS TO BANK, APPRAISER ESTIMATES POST REHAB VALUE, WORK MUST BE COMPLETED W/IN 6 MONTHS

FIXED-RATE LOAN: HAS A ONE-TIME RATE THAT REMAINS CONSTANT THROUGHOUT THE LIFE OF THE LOAN.

GRADUATED PAYMENT MORTGAGE: A FIXED-RATE LOAN THAT HAS PAYMENTS STARTING LOWER THAN A STANDARD FIXED-RATE LOAN, WHICH THEN INCREASES BY A PREDETERMINED AMOUNT EACH YEAR FOR A SET NUMBER OF YEARS.

VA LOAN: 0-3.3% DOWN, MINIMUM CREDIT SCORE 620, NO MONTHLY MORTGAGE INSURANCE, OWNER OCCUPIED, ONE TIME VA FUNDING FEE, MAX SELLER CONTRIBUTIONS: 4%, NO INCOME LIMIT

USDA LOAN: 0% DOWN, DESIGNATED AREAS ONLY, ONE TIME GUARANTEE FEE, 2% GUARANTEE FEE (PMI), MINIMUM CREDIT SCORE OF 620, NO RESERVES

HELOC LOAN (HOME EQUITY LINE OF CREDIT): CAN TAKE OUT HELOC ON 1ST HOME TO PAY FOR 2ND HOME. ADJUSTABLE RATE

HULA MAE LOAN: 

MORTGAGE CREDIT CERTIFICATE: A FIRST-TIME HOMEBUYER PROGRAM IS SUBJECT TO PURCHASE PRICE AND INCOME LIMITS IN SOME AREAS. IT IS ACTUALLY A SPECIAL TAX CREDIT AND ASSISTS THE BUYER IN QUALIFYING FOR MANY LOAN PROGRAMS.