How to find the best loan for you
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| Jade Meredith |
| 877.363.3006 |
| jadem@tgrealestateco.com |
TG Real Estate Co
find the ideal loan for you, it's wise to evaluate your current situation and become familiar with find
the ideal loan for you, it's wise to evaluate your current situation and become familiar with each
type of loan and mortgage.
each type of loan and mortgage.
FHA
The most common misconception about FHA loans is that the Federal Housing Administration
lends the money. The fact is the FHA simply insures the loan in case of default and the loan must
be given out by an FHA approved lending institution. First-time homebuyers often choose this type
of loan and while the interest rates are competitive with other types of loans, they may have higher
loan-to-value ratios. An FHA loan is best for someone who doesn't have perfect credit and
individuals who need low down payments and low closing costs.
VA-Guaranteed Loans
The Department of Veterans Affairs has a division that guarantees loans for veterans to purchase
or build a home. In order to take advantage of the VA loan, an individual must meet certain
requirements to receive a VA certificate. The VA loan allows a veteran or spouse to purchase or
build a home with a small down payment or none at all. As with the FHA loan, the Department of
Veterans Affairs doesn't lend the money. They simply insure the loan.
Conventional
A conventional loan is considered to be a secured loan. The loan-to-value ratio is most often one
of the lowest, with a ratio that is generally less than 80 percent of the value of the home. With this
type of loan, the borrower is often required to make a down payment of at least 20 percent. The
conventional loan is best for buyers who can put down at least a 20 percent down payment.
ARM
The Adjustable Rate Mortgage is a loan that will have a fixed interest rate for a specified amount of
time and then the interest rate will be adjusted according to an objective economic indicator. The
loan will have a margin of how much the interest rate can be adjusted, as well as how often. This
type of loan is best for someone who is not planning to be in their home long-term. An ARM allows
for lower interest rates and a lower payment at the beginning of the loan term.
Sub-prime
The Sub-prime lender is one who will approve financing for individuals who have been turned
down by traditional lenders, most often due to a low credit score. Because of the higher risk, the
borrower must pay a higher interest rate on the loan. The Sub-prime loan should only be used by
buyers who have been turned down by mainstream lenders since the borrower will end up paying
thousands of dollars more on this type of loan.
No Down Payment
There are several types of loans that will allow for no down payment from the borrower. These
often include FHA loans, VA loans, as well as Sub-prime and Conventional. However, when no
down payment is given, the interest rates will often reflect this by being a little higher.
PMI
Private Mortgage Insurance is an insurance the borrower purchases in order to secure the loan
with the lender. It will usually only protect the top portion of the loan in case of default. This is best
to be obtained when a borrower has a lower down payment. Once the top portion (for example, the
top 30 percent of the loan) is paid, the PMI is cancelled.
Equity Line of Credit
This type of loan is a re-usable line of credit that is secured by your original mortgage. The
payments on this type of loan will vary as the credit line rates may be adjusted every month. This
loan is best for those individuals who do not need all of the cash up front, as you can withdraw
only the amount you need and pay only the interest on what money you have withdrawn.
Home Improvement Loans
These loans are best for borrowers who need money to improve their home. They're often
available at a fixed interest rate and are tax-deductible. These loans are great for major home
improvements and will allow you to pay off your loan over a longer period of time.
No-Documentation Loans
The No-Documentation loan is best for those individuals who may have a difficult time proving
their income. Often, these are available with either a fixed or adjustable rate, as well as an
interest-only loan.
the ideal loan for you, it's wise to evaluate your current situation and become familiar with each
type of loan and mortgage.
each type of loan and mortgage.
FHA
The most common misconception about FHA loans is that the Federal Housing Administration
lends the money. The fact is the FHA simply insures the loan in case of default and the loan must
be given out by an FHA approved lending institution. First-time homebuyers often choose this type
of loan and while the interest rates are competitive with other types of loans, they may have higher
loan-to-value ratios. An FHA loan is best for someone who doesn't have perfect credit and
individuals who need low down payments and low closing costs.
VA-Guaranteed Loans
The Department of Veterans Affairs has a division that guarantees loans for veterans to purchase
or build a home. In order to take advantage of the VA loan, an individual must meet certain
requirements to receive a VA certificate. The VA loan allows a veteran or spouse to purchase or
build a home with a small down payment or none at all. As with the FHA loan, the Department of
Veterans Affairs doesn't lend the money. They simply insure the loan.
Conventional
A conventional loan is considered to be a secured loan. The loan-to-value ratio is most often one
of the lowest, with a ratio that is generally less than 80 percent of the value of the home. With this
type of loan, the borrower is often required to make a down payment of at least 20 percent. The
conventional loan is best for buyers who can put down at least a 20 percent down payment.
ARM
The Adjustable Rate Mortgage is a loan that will have a fixed interest rate for a specified amount of
time and then the interest rate will be adjusted according to an objective economic indicator. The
loan will have a margin of how much the interest rate can be adjusted, as well as how often. This
type of loan is best for someone who is not planning to be in their home long-term. An ARM allows
for lower interest rates and a lower payment at the beginning of the loan term.
Sub-prime
The Sub-prime lender is one who will approve financing for individuals who have been turned
down by traditional lenders, most often due to a low credit score. Because of the higher risk, the
borrower must pay a higher interest rate on the loan. The Sub-prime loan should only be used by
buyers who have been turned down by mainstream lenders since the borrower will end up paying
thousands of dollars more on this type of loan.
No Down Payment
There are several types of loans that will allow for no down payment from the borrower. These
often include FHA loans, VA loans, as well as Sub-prime and Conventional. However, when no
down payment is given, the interest rates will often reflect this by being a little higher.
PMI
Private Mortgage Insurance is an insurance the borrower purchases in order to secure the loan
with the lender. It will usually only protect the top portion of the loan in case of default. This is best
to be obtained when a borrower has a lower down payment. Once the top portion (for example, the
top 30 percent of the loan) is paid, the PMI is cancelled.
Equity Line of Credit
This type of loan is a re-usable line of credit that is secured by your original mortgage. The
payments on this type of loan will vary as the credit line rates may be adjusted every month. This
loan is best for those individuals who do not need all of the cash up front, as you can withdraw
only the amount you need and pay only the interest on what money you have withdrawn.
Home Improvement Loans
These loans are best for borrowers who need money to improve their home. They're often
available at a fixed interest rate and are tax-deductible. These loans are great for major home
improvements and will allow you to pay off your loan over a longer period of time.
No-Documentation Loans
The No-Documentation loan is best for those individuals who may have a difficult time proving
their income. Often, these are available with either a fixed or adjustable rate, as well as an
interest-only loan.