Loans: You need one, so what are your options

If you’re looking to take advantage of the $8,000 Tax Credit Extension, you must have a contract on a home on or before April 30, 2010.  Following a contract, the next step is financing; below are the different types of loans and mortgages to help you make a more informed decision.

• Governmental loans are mortgage programs sponsored by a government agency. These include the Federal Housing Administration (FHA), the Veteran’s Administration (VA) for veterans, and the Rural Housing Service (RHS) or Farmers Home Administration (FmHA) for those living in rural areas. These loans work best for homebuyers with low or moderate incomes, because they require low down payments and have less stringent qualifying guidelines.
• Conventional loans are loans that are not guaranteed by the government.

There are various types of mortgages:

• A Fixed Rate Mortgage (FRM) is a mortgage with an unchanging interest rate. This is a lovely option for people who think they’ll own their homes for a long period of time, or those don’t like change and who prefer an unvarying monthly payment. Lenders charge higher interest rates for these loans because the money is loaned for a longer time and is more of a risk to the lender.
• The opposite of a fixed rate mortgage is the Adjustable Rate Mortgage (ARM). An ARM has an adjustable interest rate that changes over the life of the loan. The benefit — ARMs usually offer a “teaser” interest rate that is exceptionally low for the first year or so of the loan, and even after that ARM rates are typically lower than those on fixed mortgages.
• Jumbo loans are loans that exceed conforming loan amounts specified by Fannie Mae and Freddie Mac. Currently, jumbo loans on single-family homes exceed $417,000 ($625,500 in Alaska and Hawaii). Interest rates are generally higher on jumbo loans due to the larger risk of default involved.

Are you ready to make the leap into homeownership and have more questions? Ready to see what the Nashville real estate market has to offer?  Please email me at Josh@JoshAndersonRealEsate.com  or visit my website, www.JoshAndersonRealEstate.com.