Mortgage Loans
With the real estate market explosion over the last 10 years, a call has gone out for unique mortgage loan programs. Bankers have been more than happy to answer the call. For many borrowers, traditional mortgage loans still fit the bill. Heres an introduction.
1. Conforming Loans The loans comply with requirements set down by Fannie Mae and Freddie Mac, two government sponsored entities that buy and sell loans from mortgage lenders. These entities put strict caps on the loans they will buy, with single-family homes having a mortgage cap in the range of $360,000. With the booming real estate market, many areas such as San Diego do not come close to fitting into the conforming loan market since homes average in the $600,000 range.
2. Non-Conforming Loans Known as Jumbo Loans, these mortgages are written for loans that exceed the $360,000 cap mentioned previously. They tend to have slightly higher interest rates, but are readily available.
3. Bad Credit Loans In the mortgage industry, mortgage brokers often refer to a borrowers paper. This paper refers to people with less than stellar credit. B paper refers to relatively small problems, while D paper refers to bigger issues such as bankruptcy filings. The worse your paper, the more you can expect to pay in interest, points and down payment amounts. You need to carefully determine whether paying these extra penalties makes financial sense.
Interest Rates
With each of the above loans, youll have an option of going with a fixed interest rate or an adjustable rate. Fixed interest rates simply set a definitive interest rate that will be charged over the length of the loan. Adjustable rates typically start at a figure lower than fixed rates, but can be moved up to reflect changes in the cost of borrowing money. In many ways, you are betting whether interest rates will increase in the future.
For a great majority of people, basic mortgage loan options still suffice when it comes to borrowing money. Dont fret if you have problems qualifying for these loans. There are many other options on the market these days.
Keywords: mortgage loans, jumbo loans, loan options, interest rates, conforming loan, non-conforming loan
About the Author
Dan Lewis, San Diego, California USA
Learn more about mortgage loans
Dan Lewis is a San Diego mortgage broker with Great Western Mortgage - San Diego mortgage brokers writing San Diego home loans. Dan also writes San Diego home equity loans, refinance and San Diego mortgages.