Here is a brief overview and description of the different financing types available in today's marketplace.
Conventional Mortgages
A Conventional Mortgage is a mortgage that is made by a financial institution, such as a bank or credit union, that is not insured by federal government. Typically, Conventional Mortgages carry the cheapest overall cost over the long run for a borrower. Conventional Mortgages are priced off of a Risk Based Pricing Structure. This means that the lower the overall risk to the lender, the better the price for the consumer. Factors such as credit history, down payment size and the purpose of the mortgage applied for weigh heavily into the end pricing of the mortgage.
Conventional Mortgages follow the guidelines of two very powerful Government Sponsored Agencies by the name of Fannie Mae and Freddie Mac. Fannie Mae and Freddie Mac are corporations owned by shareholders. They are not government agencies, although, they are heavily influenced by government regulation.
Conventional Mortgages can be used to purchase a primary residence, a second or vacation home or a non owner occupied home such as a rental or vacation rental.
Information on conventional loan limits for particular states and counties can be found by clicking here.
FHA Mortgages
An FHA insured loan is a US Federal Housing Administration mortgage insurance backed mortgage loan which is provided by an FHA-approved lender. FHA insured loans are a type of federal assistance and have historically allowed families to borrow money for the purchase of a home that they would not otherwise be able to afford based on the guide lines of conventional mortgages.
FHA mortgages are predominantly made to first time homebuyers. To obtain mortgage insurance from the Federal Housing Administration, an upfront mortgage insurance premium (UFMIP) equal to 1.75 percent of the base loan amount at closing is required and is normally financed into the total loan amount by the lender and paid to the FHA on the borrower's behalf. There is also a monthly mortgage insurance premium (MIP) which varies based on the amortization term and loan-to-value ratio.
Information about FHA mortgage limits for particular states and counties can be found by clicking here.
USDA Guaranteed Mortgages
The mission of USDA Rural Development’s Single Family Housing Guaranteed Loan Program is to assist low to moderate income rural homebuyers achieve their dream of homeownership.
Rural Development partners with approved local lenders to extend 100% financing opportunities to eligible rural individuals and families for the purchase of safe and sanitary dwellings. Guaranteed loans have assisted thousands of homeowners to purchase a home with affordable interest rates and loan terms.
Applicants must purchase a home within the eligible rural areas and have a household income that does not exceed the established limits where the home is located. Below are links to determine if a home you are interested in purchasing is within the USDA Eligible area:
Check Property Eligibility-http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do
Check Income Eligibility-http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do?pageAction=pageLoad&requestInfo=GuaranteedProgramInfo&NavKey=loan@21
Veteran's Affairs (VA) Mortgages
The VA helps Service members, Veterans and eligible surviving spouses become homeowners. As part of our mission to serve you, we provide a home loan guaranty benefit and other housing-related programs to help you buy, build, repair, retain or adapt a home for your own personal occupancy.
VA Home Loans are provided by private lenders, such as banks and mortgage companies. VA guarantees a portion of the loan, enabling the lender to provide you with more favorable terms.
Purchase Loans help you purchase a home at a competitive interest rate, often without requiring a down payment or private mortgage insurance. Cash Out Refinance loans allow you to take cash out of your home equity to take care of concerns like paying off debt, funding school or making home improvements.
Interest Rate Reduction Refinance Loan (IRRRL), also called the Streamline Refinance Loan, can help you obtain a lower interest rate by refinancing your existing VA loan.
The length of your service, service commitment and/or duty status may determine your eligibility for specific home loan benefits.
Purchase Loans and Cash-Out Refinances: VA-guaranteed loans are available for homes you intend to, or currently occupy, personally. To be eligible you must have a good credit score, sufficient income, a valid Certificate of Eligibility (COE) and meet certain service requirements
VA loans are obtained through a lender of your choice once you obtain a Certificate of Eligibility. Certificates of Eligibility are obtained through eBenefits, by mail and often through your lender.