What Are FHA Mortgage Loans? – FHA Loan Requirements
When I was a little girl, there were three types of mortgages available for a home buyer. Buyers could get a conventional fixed rate mortgage, an FHA loan, or a VA loan. Times have definitely changed. Now, there is a dizzying array of types of mortgages available – as the saying goes: more types of mortgages than you can shake a stick at!
Popular types of mortgage loan programs
Types of Fixed Rate Mortgages
He is the grandfather of all. Today, you can choose from 5, 10, 15, 20, 30, 40 and even 50 years of fixed rate, which are fully amortized.
The types of FHA mortgage loans are insured by the government through the mortgage insurance that is financed in the loan. First time buyers are the ideal candidates for FHA loan requirements because the down payment FHA loan requirements are minimal and the FICO scores do not matter.
This type of government loan is available to veterans who served in the US Armed Forces and, in some cases, spouses of deceased veterans. The FHA loan requirements vary according to the year of service and whether the discharge was honorable or dishonorable. The main advantage of a VA loan is that the borrower does not need a down payment. The loan is guaranteed by the Department of Veterans Affairs but funded by a conventional lender.
Types of interest-only mortgages
Calling a type of mortgage loan an “interest-only mortgage loan” is a bit misleading because these loans are not really interest-only, which means that the borrower pays only the interest on the loan. Interest only loans contain an option to make a payment of interest only. The option is only available for a certain period of time. However, some subordinated mortgages are in fact only interest and FHA loan requirements a lump sum payment, which is the initial balance of the loan at maturity.
Hybrid types of mortgage loans
ARM Mortgage Options
ARM option loans are complicated. These are variable rate mortgages, which means that the interest rate fluctuates periodically. As its name suggests, borrowers can choose from a variety of payment options and indexed rates. But beware of the minimum payment option, which can result in negative amortization.
Types of Mortgage Combo / Piggyback
This type of mortgage financing consists of two loans: a first mortgage and a second mortgage. Mortgages can be variable rate or fixed rate mortgages or a combination of both. Borrowers take out two loans when the down payment is less than 20% to avoid paying private mortgage insurance.
Types of variable rate mortgages
Variable Rate Mortgages (ARMs) come in many flavors, colors and sizes. The interest rate fluctuates. It can increase or decrease monthly, semi-annually, annually or stay fixed for a certain period before adjusting.
Mortgage buy downs.
Borrowers who want to pay a lower interest rate often opt for mortgage repurchases. The interest rate is reduced because the fees are paid to lower the rate, which is why it is called a redemption. Buyers, sellers or lenders can reduce the interest rate of the borrower.
Types of specialized mortgage loans
Streamlined mortgage loans-K
Like the 203K loan program, FHA has another program that provides funds to a borrower to repair a home by rolling the funds into one loan. The dollar limits for repair work are lower on a Streamlined-K loan, but it requires less paperwork and is easier to obtain than a 203K.
Bridge / Swing Loans
These types of mortgages are used when a seller has put a house on the market – but he has not sold it yet – and the seller wants to borrow equity to buy another house. The seller’s existing house is used as collateral for a bridge loan (also called swing).
Types of Equity Mortgages
Equity loans are second in position and younger than the existing senior mortgage. Borrowers take stock loans to receive money. Loans can be adjustable, fixed, or a line of credit from which the borrower can draw funds as needed.
Reverse mortgages are available to anyone over the age of 62 who has sufficient equity. Instead of making monthly payments to the lender, the lender makes monthly payments to the borrower as long as the borrower resides in the home. The interest rate can be fixed or adjustable. Get independent advice from a trusted advisor before taking out a reverse mortgage.