Jumbo loans

Jumbo loans are above the maximum loan amount set by Freddie Mac and Fannie Mae. They have a little higher rate than conforming. Jumbo loans are securitized by other institutes than Freddie Mac and Fannie Mae. Jumbo loans are proves to be more riskier to lenders because as the loan limits are very high and if the borrower defaults on the payment, it will be difficult for the lenders to sell luxury homes at high prices.

Due to high risk associated with Jumbo loans, lenders prefer higher down payment from the borrowers. Interest rates charged on a jumbo loan is usually higher than a loan that is conforming. Refinancing a jumbo loan can be costly due to high closing cost. You should seek advice from different authorized lenders about jumbo loans, before applying for it.

FHA loan processing

FHA loan processing is the most important part of your loan process. You must verify your file from any FHA approved lender to check whether all the documents are in order or not. You can add if any documents are missing. Following steps are taken while your FHA loan file is processed.

• Employment verification: Your form is sent to your present and past employers to verify your job and income for the past two years.

• Deposit Verification: Your form is sent to your banking institutions to verify your account balance for the past three months.

• Letter of Explanation: A letter of explanation written by the borrower explaining any issues regarding credit scores, bank account deposits, source of funds etc.

• Appraisal: It is ordered by a FHA approved appraiser, who will visit the property and verify it for FHA requirements, size of the property and will determine the value of the home.

• Additional documents: Some additional documents may be required depending on your case scenario. These documents vary for every individual's scenario.
  

Advantages of FHA refinance

• FHA refinancing can assist you with the funds or money you need to make necessary repairs in your home. With the funds, you can also expand your home and can also renovate it.

• You can lower the interest rate of the loan by refinancing the mortgage with a lower interest rate program.

• As the interest rates are lowered, so are your monthly payments and you can save significant amount of money.

• You can adjust the time period of the loan by refinancing. You can increase the period of the loan or can also decrease the period of the loan.

• FHA refinancing don't need any extra amount or cash. And, if the refinancing doesn't cost you anyhting then you can save a lot amount of money.
  

Things you should consider before applying for Reverse Mortgage

As you all know, Reverse Mortgage is a loan provided to senior citizens against their residential property and the home equity is converted into the cash. But before applying for FHA insured Reverse Mortgage you must consider the following points:

• First of all, you should go for a counselling. It acts as consumer protection and requires a third party to understand the program completely. You can contact local HUD-approved counselling agencies or national agencies and can be done on phone or face to face.

• You should consider for other options apart from a Reverse Mortgage. Because these loans are costly, and if you intend to leave the home in few years then it is advisable not to go for a Reverse Mortgage.

• Usually Reverse Mortgage does not affect your social security benefits. But, the fund you receive must be used in the same calender month only. If you retain the funds then it will counted as assets and can affect your Medicaid and social security benefits.

• You can apply for Reverse Mortgage even if you already have a mortgage but the money you recieve should be used to pay off the mortgage first as Reverse Mortgage must be in first lien position.
  

Advantages and disadvantages of Second Mortgage

Second Mortgage also known as home equity loan is simply an additional loan against your property. Lenders consider these loans as riskier because first mortgage should be paid so these loans are provided on high interest rates.

ADVANTAGES

• You can get cash easily as these loans are provided on your home equity.
• Funds you receive can be used for any purpose.
• Second Mortgage does not affect your first mortgage.
• You get tax benefit on the interest you pay on the second mortgage.

DISADVANTAGES

• If you default on the payments, the the lender of the second mortgage can foreclose your home.
• Lenders charge higher interest rates as compared to first mortgage.
• You must have good credit scores to be applicable for the second mortgage.
  

Second Mortgage

Second Mortgage is another loan against your property. Second Mortgage proves to be more risky for the lenders because if the loan goes into default then the first or original mortgage will be payed off first. Second Mortgages are available on higher interest rates as compared to first mortgage. When you apply for a second mortgage, lenders look for the following points:

• Equity on the first mortgage
• your credit score
• your employment

These loans are useful when you need a lot of money. These mortgages allow for higher loan as loan against a home is considered safe. Time period for a second mortgage may vary but its is usually for 30 years but repayment may be low. Second Mortgage can turn into a foreclosure if you default on the loan payment.

FHA insured Mortgage

FHA insured mortgages is easily available in both rural and urban areas for single families or 1-4 unit homes. To get FHA insured mortgage you must apply to HUD approved lenders only. FHA Rates are same as conventional loan rates but there is low down payment(3-4%). There are different types of FHA insured Mortgage available:

• Section 203(b): This is the most common and most popular program available. This program can be used to buy a home for single family or 1-4 units home and also manufactured homes and you can pay a fixed mortgage in 15-30 years in monthly payments.
• Section 234(c): This program is available to a person who is purchasing a unit in a condominium building. Any owner-occupant with good credit scores and will make the condominium unit permanent residence is eligible.
• Section 203(k): This program is for home improvements. It allows you for FHA refinance or improving a home build or sold 1-2 years ago.
  
• Section 237: This program is designed for people who have bad credit scores and want to buy a home and get home ownership.
  

Documentation for a FHA loan

Your FHA loan completely depends on your documentation. If you provide complete and right documents about yourself then your FHA loan is approved quickly and also you don't face any problems in future. Your documents must include:

Employment Information: this will include your 2 years of tax returns and if self-employed than you need to provide 3 years of tax returns with profit and loss statement.

Saving Information: Complete bank statements for 2 months for all your accounts and also recent statements about your stocks, mutual funds etc.

Credit Information: most recent bill statements with minimum payment information and also account number. Complete information about your landlord. If you have zero credit than most recent electricity bill, phone bills or any other loan statements.

Personal Information: Driving license, social security card, if you are applicable than green card and also your work permit.

If you own a home or making a FHA refinance than provide documents of property tax bills, homeowners insurance policy, complete information about current loan. These are the necessary documents you will need for a FHA insured mortgage. Other documents may be asked after your FHA loan file is processed.

FHA streamline refinance

FHA streamline refinancing is a great option for home owner's to decrease their interest rates and monthly payments and most of the times without an appraisal but no-appraisal loans cannot exceed your current loan. To qualify for a FHA refinancing you must have a FHA insured mortgage. The loan on which you are refinancing must be current and with good standing and must have been opened 6 months prior to refinancing.

For a FHA refinance you don't need any income verification or any other fund verifications. Also it does not require any credit reports. You can also increase or decrease the period of the loan. The extra cost can be covered by the lender by slightly high interest rates or by adding the amount to the current loan if there is sufficient equity in the home.

Pros and Cons of Reverse Mortgage

Reverse Mortgage is interestingly becoming a favorite choice among senior citizens. They can convert the home equity into money by applying for a reverse mortgage. But, they usually look at the bright side of it. Here, are some pros and cons of reverse mortgage

Pros

1. Main advantage of the loan is that even if you outlive the loan and your equity become zero, then also you can live in your home.
2. The money you get is tax-free.
3. There are no restrictions on the use of money. You can spend it on a vacation, your daily needs, college fees of children etc.
4. Reverse Mortgages are FHA insured mortgages. Even if your lender default, then also you will get the payment.

Cons

1. If you receive medicaid, SSI or other public benefits then you cannot keep the money in account for saving as it will be counted as "liquid assets" and you may loose your eligibility for these benefits.
2. If you plan to move to new residence in few years then it is advisable not to go for it as the loan is due only on permanent residence and the closing cost are usually very high.
3. Minimum age required is 62 years.
   

advantages and disadvantages of FHA loans

FHA loans are a good option for first time home buyers. These loans are FHA approved so, you can get the loan on low interest rate. But, there are some advantages and disadvantages of FHA financing.

ADVANTAGES

1. Cash down pyment required is less as compared to other conventional loans.
2. Easy interest rates for you to buy a home.
3. No penalties if you pay all or part of the loan before the scheduled time.
4. Credit score is not a major factor to qualify for the loan.

DISADVANTAGES

1. FHA loans require that the home you buy must be your permanent residence. You cannot rent the home.
2. Approval time for FHA loans are longer as compared to conventional loans.
3. Maximum money you can borrow is less compared to conventional loans.
4. Monthly Insurance Premium (MIP) between 2-3% of the total loan is required.
   

Mortgage Calculator

Mortgage Calculator helps you in calculating your monthly mortgage payment, your loan amount, time period etc. It just helps you in calculating anything you want to determine about your mortgage loan. Mortgage calculator can also be used to compare cost between different loans.

Mortgage calculators can help you in saving you thousands of dollars if you already know about the mortgage payments and the amounts by comparing different loans and choosing the best one for yourself. Many variables are included in calculating your query but the major variables are principal balance, payment amount, length of the loan and the interest rate.

Reverse Mortgages

Reverse Mortgage is a loan available to senior citizens who are above 62 years of age and owns a home with home equity. This home equity is released as one lump sum amount or multiple payments according to the borrower's choice.

Reverse Mortgages are really beneficial as it provides financial stability to senior citizens. The loan is paid back when the home is sold, the owner dies or the owner moves away. To qualify for the loan, there is no minimum income or credit required but you must qualify on other factors. Amount of money that can be borrowed depends on the following factors.

• Age of the borrower (older the senior, the more money he/she can borrow)
• Interest rate
• Appraised value of the home.

All these factors together determine the amount of money that can be borrowed by the seniors. Before applying for the loan you can consult FHA or HUD as they can provide you with proper guidance.

Do I qualify for FHA loan?

FHA loan is specially designed for low income people for whom buying a home at conventional rates is not affordable. FHA loan are most flexible and easy to qualify and are available at low down payments of 5-10%.

at conventional rates is not affordable. These loans are approved by the government so lenders provide these loans at easy rates.

• You should have a steady job with same employer for the past 2 years.
• your income for the 2 years should be same or increasing.
• If you have been bankrupted, then it must be 2 years old and since then you must have proper credit scores.
• You must provide complete information about your employment with complete tax return schedules.
• you must provide bank statements of your savings and your recent credit information and also your personal information.
  

FHA home loans or FHA refinance are easier as compared to other mortgage plans and also very affordable at government guarantees these loans.

Do i qualify for FHA loan?

FHA LOAN

FHA loans are beneficial for lower income people which helps them in buying a home. It usually serves those people who cannot afford conventional down payment. FHA or HUD does not provide loan to people, rather they guarantee your loan with their approved lenders. As these loans are guaranteed loans, FHA loan is provided by the lender on less interest rates.

There are certain requirements that you must meet before applying for a FHA home loan. some of them are:

1. You must have the same job for the last 2 years, with the same employer.
2. Your income in the last 2 years must be same or should be increasing.
3. you must provide complete details about your employer, savings, credits etc.

FHA home loan money can be used to buy a home, repair your home or remodel it. But, it is necessary that you should live in the same home you have bought, you can put the home on rent and can live in some other home.