There are 4 basic mortgage lenders:
1. Large bank: Traditional lenders are mainly large banks. There have the strictest requirements and qualifying formulas but often the lowest interest rates.
2. Credit unions and hometown banks: These are more progressive than traditional banks. In addition to past financial history, they take into account your current financial sitruation, present ability to pay and your financial stability.
3. Mortgage brokers. Mortgage brokers are financial matchmakers between lending institutions and qualified matchmakers between lending institutions and qualified borrowers, and they closely resemble both tradional and more progressive lenders. They represent banks, organiztions and private individuals with money to lend. About half of all mortgages are nandled by mortgage brokers. However, with their expertise and convenience comes a fee for finding you a loan. Legitimate loan brokers usually collect their fee after they obtain your loan. An advance-fee loan broker, in contrast, collects before the loan is found. This is illegal is some states.
4. Government agencies. The Federal Housing Authority (FHA) and the Veteran Administration (VA) are the two chief lenders. The FHA and the VA are actually insurers, not lenders. They guarantee your loan (or part of the loan) in case you default. If you qualify, you may obtain an FHA guaranteed loan for as little as three and a half percent down payment. Althoughyou cna obtain a VA mortgage with no down payment, VA mortgages are only available to qualifying veterans.
State financing agencies provide low-interest home financing through mortgage revenu bonds. These are Housing and Urban Development (HUD) supervised programs that require applicants to be non-homeowners during the previous three years.
1. Large bank: Traditional lenders are mainly large banks. There have the strictest requirements and qualifying formulas but often the lowest interest rates.
2. Credit unions and hometown banks: These are more progressive than traditional banks. In addition to past financial history, they take into account your current financial sitruation, present ability to pay and your financial stability.
3. Mortgage brokers. Mortgage brokers are financial matchmakers between lending institutions and qualified matchmakers between lending institutions and qualified borrowers, and they closely resemble both tradional and more progressive lenders. They represent banks, organiztions and private individuals with money to lend. About half of all mortgages are nandled by mortgage brokers. However, with their expertise and convenience comes a fee for finding you a loan. Legitimate loan brokers usually collect their fee after they obtain your loan. An advance-fee loan broker, in contrast, collects before the loan is found. This is illegal is some states.
4. Government agencies. The Federal Housing Authority (FHA) and the Veteran Administration (VA) are the two chief lenders. The FHA and the VA are actually insurers, not lenders. They guarantee your loan (or part of the loan) in case you default. If you qualify, you may obtain an FHA guaranteed loan for as little as three and a half percent down payment. Althoughyou cna obtain a VA mortgage with no down payment, VA mortgages are only available to qualifying veterans.
State financing agencies provide low-interest home financing through mortgage revenu bonds. These are Housing and Urban Development (HUD) supervised programs that require applicants to be non-homeowners during the previous three years.
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