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Conventional loans are the most common type of home loan, and are available for the purchase of a condo, single-family home, or townhome. Because they are guaranteed by either a private lender, Fannie Mae or Freddie Mac – as opposed to the federal government – their interest rates tend to be higher than other programs.

 

Both Fannie Mae and Freddie Mac are government-sponsored entities that purchase active mortgages from lenders and resell them to investors. In turn, this gives lenders’ room to help other qualified borrowers purchase homes as well.

 

Down payments on conventional loans depends greatly on your financial situation, the property you’re looking to purchase, and the type of loan you are looking to get. For example:
 

• If you are a first-time home buyer looking to get a fixed-rate loan, the down payment could be as low as 3%. But, adjustable-rate loans require a minimum of 5%.
• If you are interested in purchasing a second home, then down payment requirements rise to a 10% minimum.
• If you are looking to purchase a multi-unit property, you may be required to put down 15%.

 

Keep in mind that if you put down less than 20%, you may be required to pay for private mortgage insurance (PMI), to protect your lender in the event of a default. This will affect your total monthly payments. But, once you’ve reached 22% equity in your home, most lenders will remove the PMI requirement from your loan.

Established by the federal government in 1934, FHA loans are guaranteed by the Federal Housing Administration. They are great for first-time homeowners that may not have enough for a significant down payment. These loans can also help home buyers with low-to-moderate credit scores, or who have bankruptcies or foreclosures on their credit reports. FHA loans come in 30-year or 15-year terms, with either fixed or adjustable rates.

While qualified borrowers can put as little as 3.5% down, FHA loans can only be used to purchase a primary residence, which can be in the form of a single-family home, a multi-family home with up to 4 units, a condo, or a manufactured home. Furthermore, you must be living at the property within 60 days of the closing date.

The Federal Housing Administration (FHA) offers 5 types of loans, all of which Mortgage Superstore can help you obtain:
 

• Traditional Mortgages: to help you purchase a primary residence

• Home Equity Conversions: to help homeowners 62+ turn home equity into cash through a reverse mortgage

• FHA 203(k) Improvement Loans: to not only help you purchase a home, but also give you a little extra cash to make upgrades and improvements throughout your new home.

• Energy Efficient Mortgage: to both help you get a loan for your new home, and put extra money in your pocket to specifically make energy-efficient modifications to your new home.

• Section 245(a) Loan: to help those borrowers that anticipate a rise in household income – while monthly payments increase over time, they can help shorten loan terms.
   

If you are looking to refinance an existing FHA loan, the Federal Housing Authority also offers a Streamline refinance option that can help you lower your current interest rate.

Created and by the Department of Veterans Affairs in 1944 to aid veterans returning home from World War II, VA-backed loans have become one of the strongest benefits offered to our veterans today. But, only active-duty military personnel, qualified veterans, and surviving spouses are eligible to apply.

Upon earning the VA loan benefit, it carries on throughout the beneficiary’s lifetime – they can reuse the benefit as often as they want and can even have more than one VA loan at once.

There are many benefits to getting a VA-backed loan:

 

• They are typically available in 15-year and 30-year fixed rate terms, but certain qualified borrowers can get 20-year or 25-year terms.

• Eligible applicants can borrow up to Fannie Mae/Freddie Mac conforming loan limits.

• There is no down payment required, as long as the borrowed amount is less than the property’s current appraised value.

• Borrowers don’t need to get private mortgage insurance or pay monthly mortgage insurance premiums.
   

Best of all, VA-backed loans can be used to purchase all types of properties – from single-family homes to condominiums, townhomes, mutli-family properties, manufactured/mobile homes, and even vacant lots to build a new home! The only caveat is that the property must be purchased as a primary residence and the borrower must reside there within 60 days of the closing date.  

If you’re 62 years of age or older and find yourself in need of additional funds, then you may qualify for a Reverse Mortgage. These loans are similar to a home equity line of credit as they are both based on the current value of your home. But rather than a set monthly payment, Reverse Mortgages offer flexible repayment options; you can opt to pay only the interest on a monthly basis, both principal and interest monthly, or no monthly payments at all!

Qualifying homeowners can get a reverse mortgage with interest rates as low as 3.5%, and use the funds as needed, like buying an additional home, consolidating debt, completing major home renovation projects, purchasing a new car, or even having a standing line of credit to use as the need arises.

To qualify for a Reverse Mortgage, borrower must:

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• the property must have at least  50% equity, whether you own the property outright or have paid a significant amount of the existing mortgage,

• consider the property their primary residence,

• have no delinquent federal debt,

• have the financial ability to maintain payments on property taxes, property insurance, and any HOA dues, and

• participate in a counseling session with a Department of Housing and Urban Development Reverse Mortgage Counselor.

 

Properties eligible for reverse mortgages can vary based on whether the loan is privately funded or government sponsored. But generally, reverse mortgages can be obtained on single-family homes, multi-unit properties, and manufactured homes built after June 1976.

Ultimately, reverse mortgages do not come due until either the last living borrow passes away, the borrower(s) sell the property, or the borrower(s) move away. (In the case where the borrow passes away, the mortgage passes on to their estate, where the home can either be sold to repay the loan or the estate can choose to pay off the mortgage and retain ownership the property.)

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CAUTION  
Reverse Mortgages have been a major avenue for predatory scams. We URGE you to speak with an experienced, licensed mortgage broker – like the team at Mortgage Superstore – to fully review your situation and determine whether or not a Reverse Mortgage is indeed the right option for you. A Reverse Mortgage is not the only option to make the most out of your home equity, and it is worth speaking to a professional beforehand.

The distinction between mobile, manufactured, and modular homes becomes an important one when it comes down to financing. A mobile home is a factory-built, mobile structure manufactured before 1976. Like mobile homes, manufactured homes are also built in a factory, and are also mobile – the only difference being that they were manufactured after June 15, 1976 – as per the Housing Act of 1980. Modular homes are also manufactured in a factory, but unlike the other two, they often have crawlspaces and basements built into the land they sit on. (A modular home is far more like a traditional home than the other two.) This distinction will dictate the kind of lender and loan available to you.

Lenders that do work with factory-built homes also offer different types of loans based on whether you own or lease the land that the home sits on, and whether the home you are purchasing is new or used.

Financing options include:

 

• Conventional Financing – can be used to purchase a primary or secondary factory built home with as little as 5% - 10% down.

 

• FHA Financing – with a minimum down payment of 3.5%, these loans can only be used to purchase a primary factory-built residence.

 

• VA Financing – a benefit only available to our active military, retired veterans, and eligible spouses, these loans have no down payment requirement.