Conforming Loans
Conventional loans may be conforming or non-conforming. Conforming loans have guidlines that follow the terns established by Fannie Mae and Freddie Mac. These two corporations purchase mortgages complying with these guidelines from mortgage lenders, and bundle the mortgages into securities and sell these securities to investors. This allows, Fannie Mae and Freddie Mac, to provide a huge pool of affordable funds for home loans giving Americans easy access to Home Loan Credit.
Fannie Mae and Freddie Mac establish the maximum loan amounts, applicant's credit and income requirements, down payment needs, and property eligability. Fannie Mae and Freddie Mac establish new mortgage limits every year.
The 2006 conforming loan limits for first mortgages are:
| Loan Limits for: |
2006 |
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| One-family |
$417,000 |
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| Two-family |
$533,850 |
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| Three-family |
$645,300 |
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| Four-family |
$801,950 |
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Jumbo Loans
Loans above the maximum mortgage amount established by Fannie Mae and Freddie Mac are jumbo loans. Since jumbo mortgages are bought and sold on a smaller scale, they normally have a higher interest rate than conforming loans. If you are looking for a jumbo mortgage and would like the insight of a highly qualified mortgage professional, we recommend that you complete this no obligation inquiry and discuss the many products and terms available to today. We have selected the most qualified Jumbo professionals that service your area.
Fixed Rate Mortgages
With fixed rate mortgage the interest rate and monthly payments remain fixed for the term of the loan. Fixed rate loans are available for 40, 30, 25, 20, 15 years and 10 years. Nornally, the shorter the length of a mortgage, the lower the interest rate.
The most popular mortgage terms are 30 and 15 years. With the traditional 30 year fixed rate loan, your monthly payments are lower than they would be on a shorter term mortgage.
Adjustable Rate Mortgages
Variable or adjustable loan is loan whose interest rate, and accordingly monthly payments, fluctuate over the period of the loan. With this type of mortgage, periodic adjustments based on changes in a defined index are made to the interest rate. The index for your particular loan is established at the time of application.
Well known ARM indexes include:
Option ARM Loans
Probably the most creative products that don't require a set payment each month are PAY OPTION ARMS. After the first payment, you get to select from four payment options every month. You will receive a monthly statement offering a minimum payment, an interest-only payment, a 30-year amortized payment or a 15-year amortized payment .
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