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 Choosing a mortgage can be a daunting task.
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Below are a list of loan types available - (See below for documentation needed when applying for a loan.)
Fixed-Rate Mortgage Types
This is the granddaddy of them all. Now you can choose from 10-year, 15-year, 20-year-, 30-year, 40-year and even 50-year fixed-rate mortgages, all of which are completely amortized.
FHA Loans
FHA mortgage loan types are insured by the government through mortgage insurance that is funded into the loan. First-time home buyers are ideal candidates for an FHA loan because the down payment requirements are minimal and FICO scores do not matter.
VA Loans
This type of government loan is available to veterans who have served in the U.S. Armed Services and, in certain cases, to spouses of deceased veterans. The requirements vary depending on the year of service and whether the discharge was honorable or dishonorable. The main benefit to a VA loan is the borrower does not need a down payment. The loan is guaranteed by the Department of Veteran Affairs, but funded by a conventional lender.
Interest-Only Mortgage Types
Calling a mortgage loan type an "interest-only mortgage" is a bit misleading because these loans are not really interest only, meaning the borrower pays only interest on the loan. Interest-only loans contain an option to make an interest-only payment. The option is available only for a certain period of time. However, some junior mortgages are indeed interest only and require a balloon payment, consisting of the original loan balance at maturity.
Hybrid Types of Mortgage Loans
- Option ARM Mortgage Types
Option ARM loans are complicated. They are adjustable-rate mortgages, meaning the interest rate fluctuates periodically. Like the name implies, borrowers can choose from a variety of payment options and index rates. But beware of the minimum payment option, which can result in negative amortization.
- Combo / Piggyback Mortgage Loan Types
This type of mortgage financing consists of two loans: a first mortgage and a second mortgage. The mortgages can be adjustable-rate mortgages or fixed-rate or a combination of the two. Borrowers take out two loans when the down payment is less than 20% to avoid paying private mortgage insurance.
- Adjustable-Rate Mortgage Types
Adjustable-rate mortgages (ARMs) come in many flavors, colors and sizes. The interest rate fluctuates. It can move up or down monthly, semi-annually, annually or remain fixed for a period of time before it adjusts.
- Mortgage Buydowns
Borrowers who want to pay a lower interest rate initially often opt for mortgage buydowns. The interest rate is reduced because fees are paid to lower the rate, which is why it's called a buydown. Buyers, sellers or lenders can buy down the interest rate for the borrower.
Specialty Mortgage Loan Types
Streamlined-K Mortgage Loans
Like the 203K loan program, FHA has another program that provides funds to a borrower to fix-up 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 mortgage loans are used when a seller has put a home on the market -- but it has not yet sold -- and the seller wants to borrow equity to buy another home. The seller's existing home is used as security for a bridge (also called swing) loan.
- Equity Mortgage Loan Types
Equity loans are second in position and junior to the existing first mortgage. Borrowers take out equity loans to receive cash. The loans can be adjustable, fixed or a line of credit from which the borrower can draw funds as needed.
- Reverse Mortgages
Reverse mortgage are available to any person over the age of 62 who has enough equity. Instead of making monthly payments to the lender, the lender makes monthly payments to the borrower for as long as the borrower resides in the home. The interest rate can be fixed or adjustable.
Option ARM Mortgage Types
Option ARM loans are complicated. They are adjustable-rate mortgages, meaning the interest rate fluctuates periodically. Like the name implies, borrowers can choose from a variety of payment options and index rates. But beware of the minimum payment option, which can result in negative amortization.
- Combo / Piggyback Mortgage Loan Types
This type of mortgage financing consists of two loans: a first mortgage and a second mortgage. The mortgages can be adjustable-rate mortgages or fixed-rate or a combination of the two. Borrowers take out two loans when the down payment is less than 20% to avoid paying private mortgage insurance.
- Adjustable-Rate Mortgage Types
Adjustable-rate mortgages (ARMs) come in many flavors, colors and sizes. The interest rate fluctuates. It can move up or down monthly, semi-annually, annually or remain fixed for a period of time before it adjusts.
- Mortgage Buydowns
Borrowers who want to pay a lower interest rate initially often opt for mortgage buydowns. The interest rate is reduced because fees are paid to lower the rate, which is why it's called a buydown. Buyers, sellers or lenders can buy down the interest rate for the borrower.
Documents Needed when applying for a Loan
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| The most important thing to understand is that the loan approval process is 100% dependent on your documentation. To insure a smooth transaction, it is imperative that you have all of your documents gathered prior to you initial loan application. Following is a list of all the documents you will need. Please feel free print this screen and use this as a checklist.
Employment Information
- Most recent two years complete tax returns with all schedules.
- Most recent two years W-2's, 1099's, etc.
- Most recent pay stubs covering one month period.
- If Applicable: Self-Employed will need Three years Tax Returns and YTD Profit & Loss Statement.
Savings Information
- Most recent three months complete bank statements for any and all accounts with all pages.
- Most recent statement from retirement, 401k, mutual funds, money market, stocks, etc.
Credit Information
- Most recent statements from your bills, indicating minimum payments and account numbers.
- Name, Address, and Phone number of your landlord, or 12 months cancelled rent checks.
- If Applicable: Should you have no credit. Copies or your most recent utility bills will be needed.
- If Applicable: Copy of complete Bankruptcy and Discharge Papers.
- If Applicable: If you co-signed for a mortgage, car, credit card, etc, need 12 months canceled checks. front and rear, indicating you are not making payments.
Personal Information
- Copy of Drivers License.
- Copy of Social Security Card.
- If Applicable: Copy of complete Divorce, Palimony, Alimony Papers.
- If Applicable: Copy of Green Card or Work Permit.
- If Applicable: If you own another home(s) - see below
If a Refinance or you own Rental Property
- Copy of Note & Deed from current loan.
- Copy of Property Tax Bill.
- Copy of Hazard (homeowners) Insurance Policy.
- Copy of Payment Coupon for current Mortgage.
- If Applicable: If property is multi-unit, need Rental Agreements.
Additional documents may be needed upon review of your file and on a case-by-case scenario.
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Click Here to Contact Sherida Studwood today to discuss which mortgage may be best for you.
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