There are several loan types available for financing your home in Salisbury or Delmar.
FHA
The Federal Housing Administration (FHA), an agency of the federal government, insures private loans that are issued for new and existing housing, and loans that are approved for home repairs. Created by congress in 1934, the FHA became part of the Department of Housing and Urban Development's Office of Housing (HUD) in 1965. Today the mission of the FHA includes helping borrowers get amounts they qualify for, and assisting lenders by reducing their risk in issuing loans. The 203(b) FHA Fixed Rate Mortgage Loan Program is the widely used FHA home loan, especially among first time home buyers. The 203(b) FHA loan keeps your down payment to a minimum. Your closing costs may also be reduced. The 203(b) FHA loan will finance up to ninety-seven percent of your loan. You must qualify with some debt-to-income ratios, but the 203(b) does not have a minimum income requirement. Check with a financial planner about your debt to income ratio, or discuss your financial status with a lender.
CDA
The Community Development Administration (CDA) Maryland Mortgage Program provides low-interest mortgage loans to eligible home buyers with low- to moderate-income households through private lending institutions throughout the State. The Program began in 1980 and is targeted primarily to first-time homebuyers. With private mortgage insurance now available, borrowers have more buying power. CDA rates are fixed, so there will be no surprises during the term of your loan. CDA has flexible loans to fit your needs. There are a variety of factors to weigh when financing your new home-your cash flow, your monthly mortgage payment, and how long you plan to live in the house. The program offers up to 100% percent financing and a discounted fixed rate. Purchase price limits, maximum income limits and targeted areas vary and may apply. Completion of a Homebuyer Training course is required. The costs of downpayment and settlement can overwhelm first-time homebuyers and is listed as the #1 barrier to home ownership. CDA has added more assistance programs for downpayment and closing costs. Borrowers purchasing a home with a purchase price of $200,000 or less may choose to receive a zero-percent deferred loan of up to $2,500 through the Downpayment and Settlement Expense Loan Program (DSELP). Other assistance is available for homebuyers with higher purchase prices.
VA
Homebuyers who are active duty and veterans with a Certificate of Eligibility from VA (Veterans Affairs) can apply for a VA backed mortgage. Major benefits of a VA loan include,
- 100% financing
- Lower interest rates, especially for borrowers with scores between 580 and 660.
- No mortgage insurance (MI) . The mortgage insurance is replaced by a funding fee that can be financed with the loan amount. For some borrowers with service connected disabilities, the funding fee is waived.
- Loans for purchase prices of up to $359,650.
USDA Rural Housing
- Loans may be for up to 100 percent (102 percent if the guarantee fee is included in the loan) of appraised value or for the acquisition cost, whichever is less. No downpayment is required.
- Mortgages are 30-year fixed rate at market interest rates.
- Loans may include funds for closing costs, the guarantee fee, legal fees, title services, cost of establishing an escrow account and other prepaid items, if the appraised value is higher than sales price.
- Sellers may contribute to the buyer’s closing costs.
- Home buyers make application with participating lenders.
- Buyers must personally occupy the dwelling following the purchase.
- For purchase loans, a one-time guarantee fee equal to 2% of the loan amount is charged to the lender. Typically, the lender passes on this expense to the borrower as a closing cost. After the one-time fee is paid, there is no recurring monthly expense (mortgage insurance) charged for guaranteeing the loan.
- Closed loans have secondary market acceptability, including Freddie Mac, Fannie Mae, Ginnie Mae pools, and many state housing finance agencies.
Conventional Loans
Conventional loans are secured by government sponsored entities or GSEs such as Fannie Mae and Freddie Mac. Conventional loans can be made to purchase or refinance homes with first and second mortgages on single family to four family homes. In general, Fannie Mae and Freddie Mac's single family, first mortgage loan limit is $417,000 in 2008. This limit is reviewed annually and, if needed, changed to reflect changes in the national average price for single family homes. The current loan limit applies to all conventional mortgages delivered after January 1, 2006. Conventional loan lenders are now typically requiring a minimum 5% downpayment. Mortgage insurance (MI) is calculated based on the subject property's loan-to-value ratio (LTV). Risk based pricing is becoming more prevalent along with a borrower having a minimum score of 680 or higher.
For loan questions or to get prequalified, CLICK HERE.
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