Home Loan Programs Part I

Home Loan Programs Part I

When shopping for a home loan it can be challenging to understand all the different home loan programs there are to choose from.  Having a thorough understanding to what there is to offer is vital to making sure that you are aligned with the best program for your circumstances.  Below are just some of the conventional conforming and non-conforming programs that are available to consumers. 

Conventional and Conforming (Private Sector)A Conventional loan is one of the least expensive loans there are.  They allow for a debt-to-income (DTI) ratio of up to 45%, as well as a loan-to-value (LTV) ratio as high as 95%.  However, keep in mind that whenever the loan-to-value exceeds 80%, Private Mortgage Insurance (PMI) is required.  Furthermore, the FICO score requirement is greater than or equal to 620.

Conventional and Non-Conforming (Private Sector)This is any loan that exceeds or fails to meet the requirements of a conforming loan.  Some of these loans are as follows:

JumboAny loan that exceeds the limit amount set by Fannie Mae (FNMA).  In the lower 48 states this loan amount is $417,000.  Alaska, Hawaii, and certain cities like San Francisco etc, are $625,500.  These areas allow 150% of the $417,000 maximum loan amount.

Alternative to A paper (Alt-A)This type of loan can be seen when the loan looks and feels like a conforming loan but there is one little thing odd that makes it not conform.  This could be something as strange construction; like an earthen home where earthen homes are not common.

SubprimeThis is when it does not meet the credit requirements of conforming.  Often times, many areas of risk apply to one loan (risk layering).  This can be seen when there is a low FICO score, high Loan-to-value ratio, and reduced documentation, all on the same loan.

B-Paper LoansThese loans have a FICO score of 620-659 with two + mortgage late payments in the past year.  Also, a bankruptcy within the past five years could also be found.

C-Paper LoansThese loans have a FICO score of 580-619 with three + mortgage late payments in the past year and one 60 day late payment in the past two years.  Also, a bankruptcy within the past two to three years can also be found.

mba rates property guidingLoan Offerings that Include

  • Special introduction teaser rates.
  • Reduced documentation.
  • Loan features that encourage refinancing.
  • High pre-payment penalties. (Sometimes referred to as Predatory Lending)

Not sure who to call or where to start?  Contact me today for a 100% free no-obligation loan inquiry analysis.

Matt Pell,  Loan Officer
Mortgage Warehouse, LLC
(239) 672-8502 – Direct Line
(239) 344-9223 – Fax
Company NMLS ID – 137154
Individual NMLS ID – 1018529
Better Business Bureau Rating = A+

Posted on July 22, 2013, in Finance and tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , . Bookmark the permalink. 1 Comment.

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