Eugene Loan Guy

My friend and internet guru, Danny Thornton with Taylor Bean and Whitacker, recently penned an interesting blog about what mortgages are. I think this is an excellent explanation for the first time home buyer and also for the seasoned real estate investor. I have added a bit of emphasis and some comments in parenthesis and at the end, but feel free to visit Danny’s blog at The Mortgage and More Blog to tell him whether he did a good job or not.

Your mortgage and you

posted by Danny Thornton on Mar 12

Over the years, mortgages have been a hot topic. Since 2006, they have been a very HOT topic. With that said, your mortgage can be your friend or your enemy. The decision is really in your hands. This is one of the facts that many people either do not understand or do not realize. Today, we are going to take a look at your mortgage and you.

When you first start talking about mortgages and the home owners that acquire them, the first thing that you have to understand is the difference in obtaining a mortgage for purchasing aspects and obtaining a mortgage through refinancing . Once those grounds are established, then you and your loan officer can determine the program that best fits your needs and wants.

Mortgages can be acquired through many different avenues. Federal Housing Administration, better known as FHA, offers mortgages to people. The mortgage is back by the Federal Government through the Mortgage Insurance that is captured on all of their loans. This money is funneled into an account and used to pay insurance claims on defaulted loans. These loans do not cost the tax payers any money. They are the largest insurer of mortgages in the world. The Veterans Administration also assists military personnel with a mortgage as well. They do not fund the loans but they guarantee the loan to the lender (there is no mortgage insurance on a VA loan but there is a funding fee that is financed). USDA Rural Development mortgages are available to applicants that are looking to buy properties that are eligible for this program (again, no mortgage insurance but a funding fee to guarantee the loan). The last mortgage to mention would be the conventional mortgage. These are loans that are NOT backed by the federal government. (Sort of, since the government took over Fannie Mae and Freddie Mac, you have to admit that those loans sold to these organizations are backed by the government.)

With the knowledge of the types of mortgages out there, your loan officer should be able to help you in picking the one that is right for you. In the long run, it is your decision as to what the final loan product will be. If you are not comfortable with the terms that are laid out in the financing, then you need to speak up before you sign the final paper work.

Overall, the different types of mortgages make some selections available for the home buyer. If you have a 10 per cent or greater down payment, the conventional mortgage may be the best way for you to go. However, with less of a down payment, one of the government programs may be just the ticket. FHA is limited to specific loan amounts that vary by county. VA has no loan limit but has stricter income requirements and the joint applicant must be a spouse or otherwise eligible for the same benefits. FHA and VA loans are also available for refinance of your current home.USDA loans have upper income limits and are only available outside of major metropolitan areas and are not available for refinances.