Choosing the right type of mortgage can be a difficult task because of the vast array of mortgage products available to consumers. It will require some careful thought about your personal financial situation. Below are some of the types of loan programs offered by
Burnet Home Loans/PHH Mortgage. Each program has specific guidelines and criteria that must be met such as loan amount, property type, debt ratios and credit history. We are constantly adding new programs to meet our clients' demands. Please feel free to contact us about your personal situation and how these programs may work for you.
Conventional | Adjustable
Rate Mortgage | Jumbo | Government
Minimum Down | First Time
Buyers | Alternative Lending
Conventional
The conforming conventional fixed rate loan is the most popular and is the loan most commonly talked about. These programs have a maximum loan amount of $322,700, for single family homes. The loan limits are higher for multi-family dwellings. These loans are 15, 20 and 30 years in length and conform to Fannie Mae and Freddie Mac guidelines. You will want to consider a Conforming Conventional Fixed Rate Loan if you plan on longer term ownership ( longer than seven years), you want the security of a fixed principal and interest payment, and your credit history is very good.
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Adjustable Rate Mortgage's (ARM's)
Adjustable Rate Mortgages are loans on which the rate is fixed for a period of time and then the interest rate adjusts. The interest rate may be fixed for the first 1, 2, 3, 5, 7, or 10 years. After that, during the adjustable period, the interest rate is generally re-set every 12 months, although these adjustments may occur more frequently. Many of our ARM products also carry a "conversion option"-the right to convert the loan to a fixed rate at some point, for the remaining term of the loan. Once an ARM loan begins adjusting, the rate is usually computed by adding an "index" and a "margin". The most common index used us the "T-bill" or "One-year Treasury Securities" Index. For example, if the one-year Treasury Index was at 6.0% and the margin on your loan is 2.75%, at the time of adjustment, your new rate would be 8.75% until your next adjustment period. All of these loans are capped as to how much the rates can increase from year to year as well as over the life of the loan. The advantage of an ARM loan is the they generally offer a lower initial interest rate. You will want to consider an ARM if you are planning shorter-term ownership (10 years or less), or if you believe interest rates will decrease.
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Jumbo
A Jumbo loan is a loan that is greater than $322,700 and thus does not meet the standard guidelines of a conforming conventional loan. Rates on these loans may be slightly higher than conventional loans and may have different loan-to-value requirements. You may choose either a fixed rate of adjustable rate loan.
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Government (F.H.A. and V.A.)
A FHA loan is a loan that is insured by the Federal Housing Administration. They do require the borrower to pay Mortgage Insurance Premiums(M.I.P.) for the life of the loan. The maximum loan amount is $218,405 , for a single family property in the Twin Cities metropolitan area. Maximum loan amounts are based on the number of units and the county the property is located in.
A VA loan is a loan made available for qualified veterans and
guaranteed by the Veterans Administration. A VA loan allows financing up
to 100% and require the borrower to pay a one time funding fee. The
maximum loan amount is $322,700 and is based upon the veteran's eligibility. If you think you may qualify for a VA loan, you can contact the Veterans administration to determine your eligibility.
In addition to being "eligible" for a VA loan, Veterans must "qualify", meaning they must meet standards regarding income, credit history, and assets.
FHA and VA will insure loans on 2, 3, and 4 unit properties, as well as single family homes, but the borrower must intend to occupy the property they purchase.
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Minimum Down Loans
There are a variety of minimum down programs available to borrowers who may not be able to meet the cash requirements of the other loan programs.
Borrower Advantage Program - This program allows the borrowers with strong credit to finance up to 103% of the purchase price of the home. It allows 100% financing on the home (without being a Veteran) and allows you to add up to 3% of your closing costs into the mortgage. This loan is available as either a fixed or adjustable rate.
3% Down Programs - There are several programs that require only a 3% down payment. Each of the programs has differing guidelines that apply so if you think you may be interested in a low down payment mortgage please contact us for details.
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First Time Buyers Programs
A first time buyer is someone who has not owned a principal residence in the prior three years and there are a number of first time home buying programs available through State, City and County authorities. These programs offer the first time buyer a reduced interest rate for purchasing a home in a specific area. There are eligibility guidelines that a borrower must meet and limited funding from the participating municipalities. We are happy to discuss what programs might be available to you and where funds are available.
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Alternative Lending Programs
In addition to the programs outlined above, there are programs available to finance properties and borrowers that don't meet the conventional guidelines. These types of programs include the following;
