In tough economic times, it can be difficult to determine where to make investments for the future. Investing in property or a family home may be a good choice in the long run, especially in today’s market of buying opportunities.
There are several types of mortgages available for homeowners; a basic overview of the most common follows.
Residential Mortgage Loans
A residential mortgage loan is a loan secured by real property. Typically, this loan is for a 1-4 unit residential dwelling. Residential mortgage loans cover primary residences, second home and investment properties.
Conforming loans are eligible for sale on the secondary market. These loans are typically purchased through a Government Sponsored Enterprise (Fannie Mae or Freddie Mac). As a result, conforming mortgage loans are underwritten to the guidelines set forth by the appropriate agency. A variety of loan options are offered including Fixed Rate Mortgages and Adjustable Rate Mortgages. Fixed rate mortgages offer a constant rate throughout the term of the loan. Adjustable rate mortgages offer a fixed rate for a period of time (one, three, five, seven or 10 years) and then adjust based on the terms of the loan.
Conforming loan limits are determined geographically. The current maximum conforming loan limit for South Carolina, North Carolina and most of the nation is $417,000 for one-unit properties. The maximum loan limits are established by the Federal Housing Finance Agency under the terms of the Housing and Economic Recovery Act of 2008 and are calculated each year.
A Jumbo Mortgage is a mortgage loan amount above the conforming loan limits. As with conforming loans, fixed rate and adjustable rate mortgages are offered on jumbo loans.
The Federal Housing Administration insures an FHA loan. FHA loans allow for low down payment, seller paid closing costs, gifted down payment and non-occupant co-borrowers, which may be advantageous for first-time homebuyers. Maximum loan limits are determined by the U.S. Department of Housing and Urban Development and vary per county and state. As with Conforming and Jumbo, FHA loans allow fixed rate and adjustable rates.
The U.S. Department of Veterans Affairs guarantees all VA loans. The Veterans Administration determines if a veteran is eligible to participate in the program through a valid Certificate of Eligibility. VA loans offer veterans an opportunity to finance a home with little to no down payment.
The above is only a basic informational overview of mortgage loans. Opportunities for borrowers may be different based on personal characteristics. For more information on mortgage loans or loan refinancing, visit a local CresCom Bank branch or learn more on the CresCom Bank website, www.haveanicebank.com.