Overview of Products
There is a difference between government regulated loans and conventional loans. South Florida Mortgage Lenders can help you make the right choice when deciding on your mortage needs.
Fixed v. Adjustable Rate (ARMs)Mortages
Fixed-rate mortgage loans have the same interest rate for the entire repayment term.
Adjustable-rate mortgage loans (ARMs) have an interest rate that will change or "adjust" from time to time. Typically, the rate on an ARM will change every year after an initial period of remaining fixed.
Government Insured v. Conventional
A conventional home loan is one that is not insured or guaranteed by the federal government in any way. This distinguishes it from the three government-backed mortgage types (FHA, VA and USDA).
Jumbo v. Conforming
A conforming loan is one that meets the underwriting guidelines of Fannie Mae or Freddie Mac, particularly where size is concerned. Fannie and Freddie are the two government-controlled corporations that purchase and sell mortgage-backed securities (MBS).
A jumbo loan, exceeds the conforming loan limits established by Fannie Mae and Freddie Mac. This type of mortgage represents a higher risk for the lender, mainly due to its size. As a result, jumbo borrowers typically must have excellent credit and larger down payments, when compared to conforming loans. Interest rates are generally higher with the jumbo products, as well.
The Federal Housing Adminstration (FHA) requirements for credit score and down payments are far lower than for conventional loans. Borrowers can technically qualify for an FHA loan with credit scores of at least 580 and a down payment of just 3.5 percent, according to HUD.