An FHA insured loan is a loan that is backed by insurance from the Federal Housing Administration. FHA Loans are provided by FHA-approved lenders. FHA insured loans are a type of federal assistance and have historically allowed lower income Americans to borrow money for the purchase of a home that they would not otherwise be able to afford. To obtain mortgage insurance from the Federal Housing Administration, a mortgage insurance premium (MIP) equal to a percentage of the loan amount at closing is required, and is normally financed by the lender and paid to FHA on the borrower’s behalf. Depending on the loan-to-value ratio, there may be a monthly premium as well.
The program originated during the Great Depression of the 1930s, when the rates of foreclosures and defaults rose sharply, and the program was intended to provide lenders with sufficient insurance. Some FHA programs were subsidized by the government, but the goal was to make it self-supporting, based on insurance premiums paid by borrowers. Over time, private mortgage insurance (PMI) companies came into play, and now FHA primarily serves people who cannot afford a conventional down payment or otherwise do not qualify for PMI.
A VA loan is a mortgage loan guaranteed by the U.S. Department of Veterans Affairs (VA). These loans are issued by VA-approved lenders.
The VA loan was designed to offer long-term financing to eligible American veterans or their surviving spouses (provided they do not remarry). The basic intention of the VA direct home loan program is to supply home financing to eligible veterans in areas where private financing is not generally available and to help veterans purchase properties with no down payment.
A Conventional mortgage is a loan that meets the underwriting guidelines of Fannie Mae or Freddie Mac. Not a government backed loan such as FHA or VA. The real estate being purchased or refinanced is collateral and is pledged as security for the debt.
ARM (Adjustable Rate Mortgage)
An ARM (Adjustable Rate Mortgage) is a mortgage in which the interest rate is adjusted periodically according to a pre-selected index. Adjustments may occur at different intervals depending upon the loan program. Some adjust yearly while others may stay fixed for a term of one, three, five or seven years then adjust yearly.
The terms, adjustment schedule and index that the loan is based upon vary by loan program. To protect the borrower, “caps” are put into place to limit the amount of payment adjustment.
HARP (Home Affordable Refinance Program)
Many homeowners don’t have enough equity to qualify for traditional refinance options. The federal government created the Home Affordable Refinance Program to give these homeowners an opportunity to refinance. You may be eligible for the program if:
- You have kept up with your mortgage payments
- Your loan is owned or guaranteed by either Fannie Mae or Freddie Mac
- Your first mortgage amount is no more than 105% of the home’s current value.
FHA Streamline Refinance
FHA Streamline loans are designed for people who already have FHA mortgages. FHA Streamline loans have reduced paperwork, simple requirements for eligibility, and a list of features which makes FHA Streamline financing very attractive for borrowers.
The basic requirements for an FHA Streamline loan include:
- Your current mortgage must be an FHA mortgage
- You must have all mortgage payments made on time for the last year
- You must have owned the property for at least six months before the refinancing
- Cash-out is not allowed. You are not allowed to get any money from the refinancing.
- FHA Streamline loans do not require an appraisal, but if you choose a no-appraisal loan the amount can’t exceed your current loan
- Closing costs must be paid or arranged for through a “no-cost” FHA Streamline loan or by including the closing costs into a “with appraisal” FHA Streamline loan.
VA Streamline Refinance
A VA Streamline Refinance is an IRRRL (Interest Rate Reduction Refinance Loan) for an existing VA guaranteed loan. The new VA loan is usually at a lower interest rate than the existing VA loan, and with lower principal and interest payments than the existing VA loan. By utilizing a VA Streamline Refinance a veteran can save thousand of dollars and be able to enjoy the savings from a VA streamline refinance very quickly.
A loan with a mortgage amount that exceeds limits set by Fannie Mae or Freddie Mac. Currently at $417,000 for a single-family dwelling. We offer fixed rate and adjustable rate jumbo loans with features to meet your unique home lending needs.