Mortgage loans are typically categorized as either fixed rate or adjustable rate. Sometimes they can even be a combination where the rate is fixed for a certain period of time and then converts to an adjustable rate for the remainder of the loan term. Common loan terms are 30 or 15 years, but we also offer terms as short as 10 years and can offer 20 and 25 year terms in some instances.
In most cases, the shorter the loan term the lower the interest rate (but the higher the payment since the loan is being amortized over a shorter period of time). As an example, total interest paid in a 15 year loan may end up being less than half what you?d pay on a 30 year loan, but your monthly payments will be higher.
Despite what many people think, the Federal Housing Administration (FHA) does not actually issue mortgage loans, it provides mortgage insurance which protects lenders like AmeriFirst Home Mortgage. Customers like FHA loans because they have more liberal qualification requirements, much like hybrid mortgage loans (mentioned earlier).
In addition, they typically have a lower down payment requirement (as low as 3.5%), lower monthly insurance premiums and often have lower closing costs. This makes an FHA loan a very attractive loan for the first-time home buyer and also for families with low and moderate income levels.
Similar to FHA loans, VA loans are guaranteed by the U.S. Department of Veteran Affairs and lenders like AmeriFirst Home Mortgage make the loans to eligible veterans for the purchase, construction, or energy-saving improvement (approved by the lender and VA) of a home. VA loans share similar eligibility requirements as FHA loans, often with lower closing costs, and more liberal terms (usually without requiring a down payment) and even negotiable interest rates. If you qualify, the VA will issue a certificate of eligibility that you can provide a lender when making application for your loan.
Under the Guaranteed Loan program, Rural Development guarantees loans made by private sector lenders. (A loan guaranteed through RD means that, should the individual borrower default on the loan, RD will pay the private financier for the loan.) The individual works with the private lender and makes his or her payments to that lender.
Under the terms of the program, an individual or family may borrow up to 102% of the appraised value of the home, which eliminates the need for a down payment. Since a common barrier to owning a home for many low-income people is the lack of funds to make a down payment, the availability of the loan guarantees from RD makes the reality of owning a home available to a much larger percentage of Americans.
HomePath Mortgage allows a borrower to purchase a Fannie Mae-owned property with a low down payment, flexible mortgage terms, no lender-requested appraisal and no mortgage insurance. Expanded seller contributions to closing costs are allowed.
Benefits to the borrower include: