Types of Home Loan and Finance
Types of Home Loan and Finance
Types of Home Loan and Finance
There are an infinite number of loan types to buy a home out there, and lenders are constantly coming up with creative ways to wrangle in new homeowners. The type of home loan you choose can make or break you as a borrower, so make sure you fully understand it before making any kind of commitment.
Most prospective homeowners these days seem to be interested in100% financing, generally because they have don't have theassets necessary for a down payment. Unfortunately, the proliferation of these types of home loan programs has increased the number of high-risk borrowers in the United States at an alarming rate. You can get more information about Home loans at www.LoanAndFinance.visainfo4u.com
Conforming Loans and Non-Conforming Loans
One way home loans are differentiated is by their GSE eligibility. If the loan meets requirements set forth by Fannie Mae and Freddie Mac, it is considered aconforming loan. If the loan doesn't meet all theunderwritingrequirements set forth by the pair of GSEs, it is considered "non-conforming."
If your loan amount is on the fringe of the conforming limit, sometimes simply dropping your loan amount a few thousand dollars can lower yourmortgage ratetremendously, so keep this in mind anytime your loan amount is near the limit.
Conventional Loans and Government Loans
Mortgages are also classified as either "conventional loans" or "government loans." Conventional loans can be conforming or jumbo, but are not insured or guaranteed by the government.
Then there are government loans, such as the widely popularFHA loan. This type of mortgage is backed by the Federal Housing Administration (FHA). Another common government loan is theVA loan, backed by the Department of Veteran Affairs. The max loan amount for these types of loans varies by county.
You can take different types of home loans other than the loans mentioned above; like Bridge Loans, Home construction Loans, Home Equity Loans, Home Extension Loans, Home Improvement Loans, Land Purchase Loans etc for different schemes available in the market. There are different types of home loans tailored to meet your needs.
1. Home Purchase Loans: These are the basic forms of home loans used for purchasing of a new home.
2. Home Improvement Loans: These loans are given for implementing repair works, healing and renovations in a home that has already been purchased.
3. Home Construction Loans: These loans are available for the construction of a new home.
4. Home Extension Loans: These loans are given for expanding or extending an existing home. For example addition of an extra room etc.
5. Home Conversion Loans: These loans are available for those who have financed the present home with a home loan and wish to purchase and move to another home for which some extra funds are required. Through home conversion loan, the existing loan is transferred to the new home including the extra amount required, eliminating the need of pre-payment of the previous loan.
6. Land Purchase Loans: These loans are available for purchasing land for both construction and investment purposes.
7. Bridge Loans: Bridge loans are designed for people who wish to sell the existing home and purchase another one. The bridge loans help finance the new home, until a buyer is found for the home.
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