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RESIDENTIAL LOAN PROGRAMS
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Prince Georges County "NSP"
Fixed Rate Mortgage
With a fixed rate mortgage, you know exactly what your principal and interest payment will be each month for the life of your loan. It won’t change because your interest rate doesn’t change. Your taxes and insurance component of your payment towards escrow can change (and probably will) if your taxes and insurance change. Unfortunately, there’s no way to lock those in. If interest rates go up, you’re protected with a fixed rate mortgage. But, you won’t benefit if rates go down. You can always take advantage of falling rates by refinancing.
Fixed rate mortgages might be right for you if:
- Want the security of a fixed principal and interest payment.
- Think that interest rates will go up.
- Are on a fixed or limited budget.
Adjustable Rate Mortgage (ARM)
Compared to fixed rate mortgages, Adjustable Rate Mortgages (ARMs) offer a lower interest rate to start, so your monthly payments are generally lower. But, the interest rate moves up and down with the market based on an "index". Some of the more common indices include U. S. Treasury Bills, Cost of Funds Index (COFI) and the London Interbank Offered Rate (LIBOR). Most ARMs have an initial fixed rate period where the interest rate doesn’t change followed by the rest of the loan’s lifetime period where the rate is adjusted at predetermined intervals. Many ARMs have caps that limit how much your interest rate can change per period as well as for the life of the loan.
Also be aware that there are some very low rates ARMs that start out with "discounted" rates. These discounted rates are below the market rate and will definitely go up at the first adjustment period.
Adjustable rate mortgages might be right for you if:
- You want more property than you can qualify for now with a fixed rate.
- You are confident your income will increase or rates will not go up much.
- You plan on selling or refinancing within seven years of buying your home.
Refinance
Refinancing may be for you if you have an ARM and want to lock in a good fixed rate. Tap into your home equity with a cash out option to finance that home improvement project or any financial need that you have. Do you have a mortgage with a high fixed rate? Refinancing at today's low rates is just the solution.
Home Equity Line Of Credit (HELOC)
This is perfect for tapping into your home equity with flexible options. This line of credit will let you write checks when you need to, with a preset limit. This helps you finance your projects on your schedule.
Jumbo Mortgages
Jumbo Mortgages or nonconforming loans exceed the loan limits set by the two publicly chartered corporations (Fannie Mae and Freddie Mac) that buy mortgage loans from lenders. If you need to borrow more than the conforming loan limits, you need a jumbo mortgage. These jumbo mortgages typically have a higher interest rate than conforming mortgages. CHECK LOAN LIMITS
FHA
The Federal Housing Administration (FHA) provides a loan guarantee program instead of the standard private mortgage insurance (PMI) so qualified borrowers can get a mortgage loan with a down payment as low as 3.5%. The FHA doesn’t make the loan but rather they guarantee the loan minimizing the lender’s financial risk. FHA loans usually offer fairly liberal qualifying criteria compared to Fannie Mae and Freddie Mac and involve small down payments. FHA offer both fixed and adjustable loans. CHECK FHA LOAN LIMITS
VA
A Veterans Administration (VA) loan can be used to help American servicemen or women and/or their spouses secure financing for a mortgage purchase. You can check with the Veterans Administration (through its website or through other information exchanges) to find out whether you are eligible given your service history. Only service members who have received honorable discharges and who have served 90 days or more may qualify for VA loans. The advantages of VA loans are manifold. First, you can purchase relatively large properties without a down payment or with a minimum down payment. 100 percent financing is possible, although experts caution that former service members should work out long-term payment strategies (including researching pensions and other benefits) before taking on a significant interest-only loan.
Conventional
Conventional loans may be "conforming" and "non-conforming". Conforming loans follow the terms and conditions set by Fannie Mae and Freddie Mac. Non-conforming loans don't meet Fannie Mae or Freddie Mac qualifications, but are also considered conventional. A conventional loan is a lender agreement that's not guaranteed or insured by the federal government under the Veterans Administration (VA) or the Federal Housing Administration (FHA), or the Rural Housing Service (RHS) of the U.S. Department of Agriculture. A conventional loan can, however, follow the guidelines of government sponsored enterprises (GSE's) like Fannie Mae or Freddie Mac. Both Fannie Mae and Freddie Mac are stockholder-owned corporations and are not part of the federal government. They have fixed and adjustable rate options.
Reverse Mortgage
A reverse mortgage enables older homeowners (62+) to convert part of the equity in their homes into tax-free income without having to sell the home, give up title, or take on a new monthly mortgage payment. The reverse mortgage is aptly named because the payment stream is “reversed.” Instead of making monthly payments to a lender, as with a regular mortgage, a lender makes payments to you.
Residential Loan Document Check List
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