Loan Programs and Finance Types

Jeff Cook – The CA Mortgage Guy – offers programs for all your purchase and refinance mortgage transaction needs:

Program Descriptions:

• Conventional Conforming Financing – on single-family, condo and 2-4 unit properties.  Conventional conforming loans are those that meet Fannie Mae (FNMA) and/or Freddie Mac (FHLMC) underwriting requirements.  In other words, income, credit and property requirements must meet nationally standardized guidelines.  The loan amount limits are set by Fannie Mae and/or Freddie Mac and vary based upon the region in which the subject property is located.  For example, current loan limits in Los Angeles County are $729,750.  This is not the maximum purchase price, but the maximum amount you can finance to stay “conforming.”
• Jumbo Non-Conforming Financing – on single-family, condo and 2-4 unit properties.  Jumbo, or non-conforming loans, are those that exceed the loan limits allowed bf FNMA and FHLMC.
• FHA (Federal Housing Administration) – on single-family, eligible condo, PUD’s and 2-4 unit properties.  The Federal Housing Administration is a division of the U.S. Department of Housing and Urban Development, commonly referred to as HUD.  FHA loans were created to provide affordable mortgages to the average homebuyer with as little as 3.50% down payments and less than perfect credit.
• VA (Veterans Administration) – on single-family, eligible condo and PUD properties.  VA loans were created to help veterans finance the purchase of their homes with favorable loan terms.  For the purpose of the VA program, “veteran” includes active duty service personnel and certain categories of spouses.

Finance Types:

• Fixed Rate Mortgages – the interest rate on a Fixed Rate Mortgage remains fixed for the life of the loan and monthly payments principal ad interest never changes.  The most common fixed rate terms include the 30-year and 15-year.
• ARM (Adjustable Rate Mortgages) – ARMs became popular in the early 1980’s when interest rates were much higher than they are today.  At that time, lenders were offering fixed rate mortgages at 15% to 16%, over 60% of homebuyers chose ARMs with interest rates anywhere from 2% to 3% lower than the fixed rate mortgage at that time.  ARMs today typically continue to have lower rates than fixed rate mortgages, though the spread is a lot smaller than int he past.  ARMs are worth considering when you believe that rattes may fall to levels lower than they are today before the expiration of the ARM period OR if you are only planning to keep your home for only as long as the term of the ARM or less.