|
 Bad
Credit Mortgage
Interest Rates & Loans
Loan Programs
Mortgages come in
many different shapes and sizes depending on what type of property
you are buying, what repayment terms you desire, what your credit
looks like, etc.
Which loan makes the
most sense for you depends on how long you anticipate remaining in
the home, how much money you have for a down payment, and the
monthly payment you can afford.
Conventional
Conforming Loan
-Requires 5% down
-Debt-to-income ratio as high as 36%
-Requires monthly mortgage insurance (MI)
payments until loan-to-value = 80%
-Loans up to $275,000
This is a traditional
mortgage of up to $275,000 requiring a 5% down payment. It is
usually for a term of 15, 20, or 30 years. Traditional guidelines
for approving this loan allow you to have a total debt ratio (house
payment & total monthly debt payments) equal to 36%* of your gross
monthly income. This loan also requires MI until your loan to value
ratio is 80% or less (until you have 20% equity in your home). This
loan is good for people who have at least 5% to put down and who
want to be able to cancel their MI down the road.
FHA Loan
-Only 3% down!
-Debt-to-income ratio as high as 41%*
-Requires 2.25% up-front mortgage insurance (financed)
-Requires .5% monthly mortgage insurance (MI)
-Lower loan limits that vary by county
-MI may be able to be cancelled when loan-to-value = 78% or
less
-Allows for no cost/no qualifying refinance if interest rates go
down
This is a HUD or
government insured loan that allows you to buy a home for only 3%
down. It does, however, requires both an up-front MI payment of
2.25% of the loan amount (1.5% after Jan. 1, 2001) and monthly MI
payments of .5% of the loan amount (paid as part of your monthly
mortgage payment). HUD allows the total debt ratio to be as high as
41%. HUD has maximum loan limits for each county which are
significantly lower than conventional limits (Utah county's limit is
$150,100). Beginning Jan. 1, 2001, HUD will now allow mortgage
insurance on an FHA loan to be cancelled when the loan-to-value of
the home reaches 78%. An FHA loan is excellent for someone who has
less money to put down, and someone who has more debt or whose
credit is not quite as good.
No Cost FHA/VA
Refinance
Through this program,
you are allowed to refinance to a lower interest rate without having
to re-qualify for the mortgage. This means there are no income
verifications, no questions about your debt, no appraisals, and no
costs to you! We're only required to verify that you've made your
monthly mortgage payment on time for the last 6 to 12 months.
VA Loans
-Requires $0 down
-Can finance up to 103% of the value of the home - Allows closing
costs to be financed
-Debt to income ratio as high as 41%
-Only available to Veterans of the Armed Forces
-VA Funding fee charged
-No monthly Mortgage Insurance charged
-Allows for no cost/no qualifying refinance if rates go down
This is a Veterans
Administration insured loan available to Veterans of the Armed
Forces. It allows for 103% financing so a veteran can buy a home for
no money down and finance the closing costs. The VA charges a
funding fee that varies based on whether or not this is you first
time getting a VA mortgage.
Adjustable Rate
Mortgages (ARMs)
-Initial lower rate
for a period of 1, 3, 5, 7 or 10 years
-rate adjusts annually based on a particular index after
introductory period
-Conventional, FHA & VA ARMs available
-Easier to qualify at the introductory rate (1 & 3 yr ARMs, qualify
at the 2nd year rate)
-Consider using an ARM when interest rates are high or when you do
not plan to be in the home longer than the initial rate period
Adjustable Rate
Mortgages (ARMs) usually start out at a lower interest rate than the
going market rates for a 30 year fixed rate loan. The initial rate
remains fixed for a set period of time (1, 3, 5, 7, or 10 years)
after which the rate can adjust up or down annually, based on the
index the rate is tied to. The amount the interest can increase or
decrease is usually "capped" at a maximum of 1% or 2% per year and
5% or 6% over the life of the loan, depending on the loan program.
When qualifying for a 1 yr. or 3 yr. ARM, you must qualify at the
maximum rate you could have the second year of the mortgage. With 5,
7, or 10 yr. ARMs, you qualify based on the initial rate. You may
consider getting an ARM when the 30 yr. fixed rates are high but you
expect them to go down within a few years (when you could then
refinance to a lower fixed rate loan), or when you only anticipate
being in the home a few years and selling before the rate begins to
adjust annually.
|
