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>> Mortgage Alternatives

With interest rates rising, many people think it's too late to get a good deal on a mortgage to buy or refinance a home.

But there are many alternatives to the fixed-rate, 30-year mortgage. And people with cash can make bigger down payments or pay discount points to get a better deal on fixed-rate loans.

After hitting a record low of 5.21 percent in mid-June, the average rate on 30-year mortgages has risen steadily to about 6.25 percent, according to the Federal Home Loan Mortgage Corp.

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MORTGAGE:: Types of Loans  

Conventional
>> 1) Fannie Mae
Fannie Mae is the common name of the Federal National Mortgage Association. Fannie Mae is a congressionally chartered, shareholder-owned company that buys mortgages from lenders and resells them as securities on the secondary mortgage market.
Before approving you, Fannie Mae looks at a number of factors including credit ratings, debt ratio, and employment history. Loans that are approved via Fannie Mae should qualify for a better rate.
>> 2) Freddie Mac
Freddie Mac is the common name for the Federal Home Loan Mortgage Corporation. The 2003 maximum loan amount for both Fannie Mae and Freddie Mac is $322,700. Freddie Mac does not issue mortgages directly, rather, they buy mortgages from lenders and sell them as securities on the secondary mortgage market.
Before approving you, Freddie Mac looks at a number of factors including credit ratings, debt ratio, and employment history. Like Fannie Mae, loans that are approved via Freddie Mac should qualify for a better rate. A mortgage broker can also help you find the best rates from various lenders for Frddie Mac loans as well as Fannie Mae loans.

Government
>> 1) FHA Loan
An FHA Loan (Federal Housing Administration) has some advantages over conventional loans. Since FHA loans are insured by the government, they generally have more lenient qualification requirements, lower down-payment requirements, and they are assumable loans. The maximum loan amount for an FHA loan (single-family) ranges depending on the county where you live. Government loans (including the FHA loan) make up 20 percent of residential mortgages in the U.S.
>> 2) VA
A VA (Veterans Affairs) loan carries many of the same advantages as an FHA home loan. However, to qualify for this loan, you must be a qualifying veteran, the unmarried widow of a veteran, a Public Health Service Officer, or an active-duty serviceman. The maximum loan amount for a VA-guaranteed loan is $240,000. However, if you can make a large down payment, VA is now considering loan amounts above $240,000. Generally, you would need to put down 25% of the value exceeding $240,00, and you can’t exceed conventional loan limits. No down payment is required for most VA loans below $240,000.


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