What kinds of loans are available?

It is the inevitable question.  Every home purchaser is asked: “What kind of loan are you applying for?”

There are an array of home loan options and it is important to know what those options are.   There are fixed rate loans, adjustable loans, interest only loans, hard money loans, jumbo loans, FHA loans, VA loans, Reverse Mortgages etc and various other hybrids for very specific types of property.

As a seasoned mortgage broker I help my clients determine what loan would be the best fit.  And in future blogs, I am going to talk about all of these loans in detail.  But for now, let’s look at a couple of examples.  If you have served in the military you may be eligible for a VA loan which means you can buy a house with NO DOWN PAYMENT!  If you have limited funds and are looking to put the least amount possible, FHA offers a loan with a 3.5% down payment.  FHA also may be the loan for you if you have less than perfect credit or are tight on qualifying.  One of the most important factors in qualifying for a loan is your debt to income ratio.  It is calculated by totaling all your monthly debts including your mortgage payment, property tax and insurance, credit card min payments, auto loans (everything on your credit) and dividing it by your total gross income.  Conventional loans typically require your back end ratio to be under 45%.  FHA will allow your back end to 56%.  If you don’t qualify for a conventional loan, you may qualify for an FHA loan.

If the property you are buying is in a low to moderate income census track I have a portfolio loan program which allows as little as 5% down payment with NO Mortgage Insurance.  Having no mortgage insurance yields a lower payment than an FHA loan.

If you have 20% or more to use as a down payment and want to stay in the house for a long time I would recommend a conventional loan fixed for between 15 and 30 years depending on what you can afford.

If you are certain on keeping the property for less than 5 years and the home is a transitional home, a home that you only plan to be in for a short time, I would recommend a 5, 7 or 10 year Adjusted Rate Mortgage (ARM) program. The rate is fixed for the first few years and then adjusts.

If you need a loan over $625K there are Jumbo loan products available.  Or maybe an interest-only loan makes sense for you since the payment stays low and you can write off all the interest on your taxes.  It  beats renting!  And interest only loans are also great for investors.  Call me to see which loan program works best for you 818-565-6212 Ext 222 or Email: michelle@mluinc.com.  Or fill in the attached form and I will get right back to you.