Holliday Real Estate - What is the best Mortgage for you?

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648 Hillcrest Dr. Westfield, IN. 46074
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From our Indiana Real Estate site you can find information for the buyer and seller. Also information about schools, mortgages, environment, titles, plus property searches for central Indiana.
Search for Real Estate in Hamilton County Cities and Towns of Atlanta, Arcadia, Carmel, Cicero, Fishers, Noblesville, Sheridan, and Westfield. You can check for Real Estate in the Counties of Brown, Hancock, Hendricks, Johnson, Madison, Marion, Montgomery, Morgan, Putnam, and Shelby. Some property in Tipton and Clinton Counties.

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Which Mortgage is best?

Programs

Types

VA
Conventional

FHA
Nonconforming

Adjustable Rate
Fixed Rate Mortgage

Balloon Mortgage
Jumbo Loan Mortgage

Program	For Buyer who:	Loan Consists of:
FHA	Have limited funds Family help for down payment Need CO-borrower	As little as 3% down Allows Gift Funds for Down Payment Allows slightly higher ratios Credit scoring is less critical Amount of loan is limited
VA	For honorably discharged Veteran Active Duty or Reservist Prefer no money invested	100% financing for Veterans More relaxed Debt Ratios allowed Rates and Terms are liberal Rates are fixed for 15 or 30 years Amount of loan is limited
CONVENTIONAL	Have higher amount of funds available for purchase Desire to put larger amount down for smaller payment	Covers a wide range of needs from NonOwner Occupied to Jumbos Needs Down payment between 5 and 20% Stricter credit standards Unlimited loan amounts
NONCONFORMING	Had credit problems in the past	Wide range of products including Fixed Rates and ARMs

Fixed Rate Fixed rate mortgages are loans that have a fixed interest rate over the life of the loan, usually 30 years. With these loans, your interest and principal never change. Your escrow will probably change, such as property taxes and insurance, seem to go up every year. You will pay more for this type of loan, however your payments will be predictable.

Adjustable Rate Adjustable rate mortgages typically start at a lower interest rate, with an ARM, your mortgage rate rises and falls with interest rates. Also ask how the "caps" on your ARM work. "Caps" will limit the amount your lender can increase your interest rate in a single year and over the entire term of the loan. A ARM is usually adjusted annually. Increases are usually capped for a year and for the life of the loan. A ARM might include an annual cap of one percentage points and a cap over the life of the loan of five percentage points. An ARM that starts out at 5% could increase to 6% in the second year, 7% in the third year, 9% in the fourth year, at which point it would be capped. If you plan on moving within a few years this might be the loan for you. If your intentions are to move within five years look for the ARM with a five year "cap".

Balloon Mortgage A loan which is amortized for a longer period than the term of the loan. This usually refers to a thirty year amortization and a five or seven year term. At the end of the term of the loan, the remaining outstanding principal on the loan is due. If you're still in the house at the end of the term, you may need to find another mortgage in order to pay off the first one. This final payment is known as a balloon payment

Jumbo Loans Mortgages that exceed the maximum possible amount of conforming loan by Freddie Mac and Fannie Mae. These nonconforming loans may carry higher interest rate and at least 25% down payment. Most lenders follow the Fannie Mae or Freddie Mac federal guidelines for loans, which limit the amount you can borrow to $359,650 (2005) on a single family home. If you need to borrow more than this, you should look for a Jumbo loan.

Stated-Income Loans A stated-income mortgage is for people who actually make a dependable salary, but the salary is not easily documented. People who work but don't draw regular wages or salary from an employer. That includes self-employed people or those who make a living off commissions or tips.

When applying for a stated-income mortgage, the lender is going to ask for a full list of assets and liabilities. Of course, the liabilities typically come in the form of debt. This is to determine if you debt-to-income ratio is small enough to allow for the borrower to afford the payments.

For people whose credit is good enough, "stated income" loans work much like this. Consumers pay slightly higher interest rates for such loans.

By far the most popular such loans are the stated income mortgages, experts say. To qualify, borrowers usually need to have FICO credit scores in the mid- to high-600 range. FICO is the credit-risk assessment system Fair Isaac Corporation developed. It judges borrowers on a scale from 300-850 points.

Additionally, most stated income loans require that the borrower have a down payment or equity of at least 20 percent of the property's value.

One of the problems that can arise from a stated-income loan is probably quite apparent: people can lie about their income. Especially for people with good credit, the borrower can overstate their income in order to borrow more money in order to buy a bigger and better house.

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