If you are looking to buy a house, you are probably also looking into ways to obtain money for purchasing your house. Anyone looking to buy a home today can benefit by knowing some terms associated with home buying loans.
An 80/20 Loan
This is a loan which was offered by banks which was divided into two separate loans. Rather than lending one hundred percent of the amount needed to purchase a home, banks would lend the bulk, which was 80 percent and then add on a smaller amount as a separate loan, which was the 20 percent. This type of loan is not used by most banks today because it left them unprotected when borrowers defaulted.
A Mortgage Loan
This is a traditional home buying loan offered through banks and other financial institutions. The mortgage can be negotiated by hiring a mortgage broker, who works on behalf of the buyer to get a better loan. A Mortgage loan can also be described as a conventional loan.
This loan is provided to veterans and is insured by the federal government. The home buyer still needs to apply for the loan through a traditional financial institution, but the government backs the approval by insuring the loan will be paid back even if the home buyer defaults.
This another loan which is backed by the federal government. This loan is open to people who are not veterans, but the house being purchased needs to be in good structural condition in order to be approved for the loan.
First Time Home Buyer Loans
These are loans offered to people who are buying a home for the very first time. There are a number of different programs which offer these types of loans. The advantage to this loan is the ability to have a fixed rate mortgage for the duration of the loan. The requirements for this loan could include buying a house which meets standard safety regulations.
Subsidized Home Loans
These are loans offered through different agencies, which are provided to people classified in the low income category. In some cases, the amount of money will be provided through a method known as direct lending. The USDA rural housing program offers this type of financing to qualified applicants. Some agencies offer grant programs where they provide money allocated to them from the federal government. The money given through these programs does not need to be paid back.
Fannie Mae Loan
People who have their home loans under the organization known as Fanny Mae, can often qualify for refinancing when they are unable to keep up with their payments. The programs available for refinancing or modification are exclusive to loans under the Fanny Mae program.
Refinanced Home Loans
A refinanced home loan is when the remaining portion of the outstanding loan is restructured to make the payments more affordable. Refinancing can be done through the original lending agency or through a new one.
Fixed Rate Home Loans
A loan extended under this classification will not have the rates changed for the entire duration of the time the home buyer pays it back. The monthly amount includes the interest charged on the principle of the loan, which cannot change even if the housing market fluctuates.
Adjustable Rate Home Loans
The monthly payments associated with these loans can change over time. Some people choose this rate because the initial fees are lower than what is offered through the fixed rate mortgage. The monthly payments can change at any time during the loan period which can reflect either an increase or decrease in what needs to be paid back.
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Jeff has been a blogger and online entrepreneur since 2009. Currently, he works on improving user experience for ArverneByTheSea project.