 Mortgage Loans After Bankruptcy |
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Home Mortgage Loans
There are so many different types of loans, and it can be confusing to sort through them all. Here is a list of many types of home mortgage loans and summary of the advantages and disadvantages of each. FHA Loans These are loans that are administered through the Federal Housing Administration, which is a part of the U.S. Department of Housing and Urban Development. It has many loan programs that have lower down payment requirements and the requirements are generally easier to meet than those with conventional loans. There are statutory limits to the total loan amounts with FHA loans. VA Loans These loans are guaranteed by the United States Department of Veterans Affairs. This programs allows active duty servicemen and women along with retired veterans to obtain mortgage loans with favorable terms to their loans, and typically without a down payment. Additionally, it is easier to qualify for a VA loan than it is to qualify for a conventional loan. There is usually a limit set for VA loans. The VA determines your eligibility for this type of loan, but it does not make the loan. The VA will issue you a certificate of eligibility used for applying for a VA loan if you are eligible. RHS Loan Programs These loans are through the Rural Housing Service of the U.S. Department of Agriculture. It guarantees loans for rural residents that have minimal closing costs and no down payment. State and Local Housing Programs In many counties, cities, and states, there are low to moderate housing finance programs, down payment assistance programs, and programs set for the first time home buyer. These programs are usually more lenient on guidelines for qualifications and are designed with less fees up front. There are also often assistance programs for loans offered at the state or local level that allow you to receive a tax credit for a portion of your interest payment. The majority of these programs are fixed rate mortgages and have interest rates which are lower than the rates in the current market. Conforming Loans Conforming loans are ones in which the conditions and terms follow the guidelines that have been set forth by two stockholder owned corporations, Fannie Mae and Freddie Mac. They purchase mortgage loans that comply with the guidelines of mortgage lending institutions. They then package the mortgages into securities and then sell the securities to investors. In this way, Fannie Mae and Freddie Mac allow for a continuous flow of affordable funds for home financing that increases mortgage credit for Americans. Jumbo Loans Loans that are above the maximum loan amount set forth by Fannie Mae and Freddie Mac are referred to as jumbo loans. These loans often have a higher rate of interest than conforming loans, but the spread between the two types varies with the state of the economy. B/C Loans Loans that are unable to meet the borrower credit requirements of Freddie Mac and Fannie Mae are referred to as B, C, and D paper loans. These are loans that are offered to borrowers that may have filed for bankruptcy, been involved in a foreclosure, or have had late payments on credit reports. The purpose of a B/C loan is to provide financing on a temporary basis for applicants until they are able to qualify for A financing. Fixed Rate Mortgages With a fixed rate mortgage, the interest rate and the mortgage monthly payments are fixed for the period of the loan. Fixed rate mortgages are generally for periods of 10 years, 15 years, 20 years, 25 years, 30 years, and 40 years. In general, the shorter term of payment you have on your loan, the lower the interest rate will be. The 15 year and 30 year are the most popular loan terms. With a 30 year fixed rate mortgage, your monthly pa Balloon Loans Balloon loans are fixed rate loans for a short term and usually have fixed monthly payments that are based on a 30 year fully amortizing schedule as well as a lump sum at the conclusion of the term. The terms are usually for 3, 5, and 7 years. There is an advantage to this type of fixed rate loan, and it is that the interest rate of a balloon loan is typically lower than the of 30 and 15 year mortgages, which helps lower the payments. There is a disadvantage, however, and that is that at the conclusion of the term that you will have to come up with a lump sum in order to pay off the lender or refinance from your savings. Balloon loans that have a refinancing option will allow borrowers to convert their mortgage at the conclusion of the balloon period to a fixed rate loan that is based upon the outstanding principal balance if there are particular conditions that are met. Refinancing the loan at maturity does not require requalification, and it also does not require the property to be reapproved. The new loan's interest rate is a current rate when converted. There may be a fee for processing in order to secure the new loan, but it should be minimal. Adjustable Rate Mortgages Adjustable rate mortgages are ones in which the interest rate fluctuates over the period of the home mortgage. Periodic adjustments are based on changes or fluctuations in the defined index to the interest rate. There Negatively Amortizing Loans Some types of adjustable rate mortgages will offer payment caps instead of interest rate caps. The result is a limit in the amount that the monthly payment can increase. If a loan has a payment cap but does not have a periodic interest rate cap, the loan may then become negatively amortized. If the interest rate rises so that the monthly mortgage payment does not cover the interest that is due for that time, the unpaid interest will be added to the balance of the loan, so then the balance of the loan will increase. With this type of loan, you will still always have the option to pay the fully amortized amount that is due. There is an advantage to this type of loan, and that is that you are able to control the flow of cash, use low interest rates to your advantage, and pay the money back that you borrowed today at a depreciated value years away. As long as you follow rates and understand your loan and how to take advantage of it, this loan can be a great option for homeowners. It is also important to understand how often you interest rate adjusts every month. Some common loans change every month, three to six months, one time a year, every three years, or once every five years. All adjustable rate mortgages are for thirty year terms, but there are also some with fifteen or forty year terms. Option Adjustable Rate Mortgage Loans The option ARM does not require a set payment amount each month. Following the first payment, you will get four payment options to choose from. These options are a minimum payment, interest-only payment, 30 year amortized payment, or 15 year amortized payment. Fixed Period Adjustable Rate Mortgage Loans Fixed period adjustable rate mortgages allow a homeowner to have anywhere from three to ten years of fixed payments before the interest rates change. At the conclusion of the fixed period, the interest rate will adjust every year. Adjustable rate mortgages with an initial fixed period beside lifetime and adjustment caps normally have a first adjustment cap. This limits the interest rate you will pay for the first time that your rate is adjusted. The first adjustment caps do vary with the type of loan program. The advantage to these loans is that the interest rate is lower than the rate for a 30 year fixed loan, but you will also still get the advantage of a fixed rate for a specified amount of time. Two Step Mortgage A two step mortgage has a fixed rate for a specified amount of time that is usually five or seven years. Then the interest rate will change over to a current market rate. Following the adjustment, the mortgage will maintain a fixed rate for the rest of the 23 to 25 years. Convertible Adjustable Rate Mortgages Some adjustable rate mortgages will allow you to change them over to a fixed-rate mortgage at particular time, which are normally during the first five years of the date of adjustment if the interest rates are beginning to rise. The new rate is based on the current market rate for fixed rate mortgages. The conversion that must be completed is generally for a nominal fee that requires little paperwork. Graduated Payment Mortgages A graduated payment mortgage has a payment that begins low and will gradually increase at certain points that have been predetermined. Having a lower initial payment will allow you to qualify for a bigger amount to your loan. The monthly payments will end up being higher to catch up with the lower payments. The loan will be negatively amortizing in the early years of the loan, and then the principal will be paid off at an accelerated pace through later years of the loan. Buydown Mortgage A temporary buydown is a form of loan that has a discounted interest rate initially and that amount increases to a fixed rate that has been agreed upon and is usually within about one to three years. This discounted initial rate will allow you to qualify for more house with the same amount of income and will give you the advantage of a lower initial monthly payment for the first years of the loan when the extra money may be necessary for home improvements as well as furnishings for the home. In order to reduce your monthly payments for the first few years of the loan, you make an initial lump sum payment to the lend, and if you do not have cash in order to pay for the buydown, the lender is able to pay this fee if you agree to pay a higher interest rate. Add Your Comments about Mortgage Loans After Bankruptcy: |
are several known indexes. They are Treasury Bill, National Average Contract Mortgage Rate, Fannie Mae's Required Net Yield, Bank Prime Loan, Certificates of Deposit Indexes, London Inter Bank Offering Rates, Cost of Savings Index, 11th District Cost of Funds Index, Certificates of Deposit Index, 12 Month Treasury Average, and Constant Maturity Treasury.
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