Conventional Mortgage
usually amortized (paid off) over 15, 20, or 30 years
loan available for home purchase or refinance
fixed rate, adjustable rate, or balloon loan
minimum down payment as low as 5 or 10%. Less than
20% down requires PMI (private mortgage insurance). This insurance insures the bank
against you defaulting on your loan.
No Money Down
all expenses and closing costs are written into the
loan
your down payment is nothing
obviously, your interest rate is higher to compensate
for the large risk the bank is taking. however, for many... this is the only they
can get into a home all their own!
First time home buyers see this as an opportunity for
home ownership
May not be readily available
with the mortgage melt down
FHA Mortgage
loans insured against default by the United States
government
down payment as low as 3%
an FHA adjustable rate mortgage often has a 1% rate
increase with a 5% lifetime rate increase
all FHA mortgages require mortgage insurance
VA Mortgage
buyer can finance up to 100% of sale price (in other
words, no down payment or closing costs. These are wrapped into the monthly loan payments)
buyer must have a VA Eligibility Certificate
veteran can use the VA program more than once
funding fee to further guarantee. this can be
financed into the loan or paid in cash.
Contract for Deed
seller holds the mortgage for the buyer (in other
words, you make payments directly to the seller versus to the bank)
usually a balloon payment to the seller in 5 to 7
years
interest rates tend to be 1-2% higher than with
conventional (bank) loans
seller determines amount of down payment
frequently these properties are advertised...
"contract for deed" or "financing available"
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