LOANS IN USA - HomeLoans, Fixed Rate Mortgage Loan , Balloon Loan..

Fixed Rate Mortgages:

In this type of loan the interest rate and your mortgage monthly payments remain fixed for the entire loan period, and it is available for 40, 30, 25, 20, 15 years and 10 years. Generally, if the loan term is shorter then you can get it with lower interest rate. The most popular mortgage terms are 30 and 15 years. With the traditional 30-year fixed rate mortgage your monthly payments are lower than they would be on a shorter term loan. But if you can afford higher monthly payments a 15-year fixed-rate mortgage allows you to repay your loan twice as faster and it save more than half of the total interest cost of a 30 year loan.

The payments on fixed rate fully amortizing loans are calculated so that at the end of the term the mortgage loan is paid in full. During the early amortization period, a large percentage of the monthly payment is used for paying the interest.

Balloon loans:

Balloon loans are short-term fixed rate loans that have fixed monthly payments based usually upon a 30-year fully amortizing schedule and a lump sum payment at the end of its term. Usually they have terms of 3, 5, and 7 years. The main advantage of this loan type is that the interest rates on balloon loans are generally lower than 30- and 15- year mortgages resulting in lower monthly payments. The disadvantage is that at the end of the term you will have to come up with a lump sum to pay off your lender, either through a refinance or from your own savings.

Balloon loans with refinancing option allow borrowers to convert the mortgage at the end of the balloon period to a fixed rate loan based upon the outstanding principal balance if certain conditions are fulfilled. If you refinance the loan at maturity you need not be requalified, nor the property reapproved. The interest rate on the new loan will be a current rate at the time of conversion.

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State and Local Housing Programs:

Many states, counties and cities provide low to moderate housing finance programs, down payment assistance programs, or programs designed specifically for a first time buyer. These programs are typically more lenient on the eligibility guidelines and often designed with lower upfront fees. Also, there is often loan assistance programs offered at the local or state level such as MCC (Mortgage Credit Certificate) which allows you a tax credit for part of your interest payment. Most of these programs are fixed rate mortgages and have interest rates lower than the current market.

Conforming Loans:

Conventional loans may be conforming and non-conforming. Conforming loans have terms and conditions that follow the guidelines set forth by Fannie Mae and Freddie Mac. These two stockholder-owned corporations purchase mortgage loans complying with the guidelines from mortgage lending institutions, packages the mortgages into securities and sell the securities to investors. By doing so, Fannie Mae and Freddie Mac, like Ginnie Mae, provide a continuous flow of affordable funds for home financing that result in the availability of mortgage credit for Americans.

Jumbo Loans:

Loans above the maximum loan amount established by Fannie Mae and Freddie Mac are known as 'jumbo' loans. Because jumbo loans are bought and sold on a much smaller scale, they often have a little higher interest rate than conforming, but the spread between the two varies with the economy.

If you are in need of a jumbo loan and seek more information or advice you may contact the lending agencies available in your area.

B, C and D Paper loans:

Loans that do not meet the borrower’s credit requirements of Fannie Mae and Freddie Mac are called 'B', 'C' and 'D' paper loans vs. 'A' paper conforming loans. B/C loans are offered to borrowers that may have recently filled for bankruptcy, foreclosure, or have had late payments on their credit reports. Their purpose is to offer temporary financing to these applicants until they can qualify for conforming "A" financing. The interest rates and programs vary, based upon many factors of the borrower's financial situation and credit history.

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Types of Mortgage Loan:

The mortgage loan types available can be divided into two different categories viz., one as Conventional and Government loans. Secondly, all the various mortgage programs may be further classified as fixed rate loans, Adjustable rate loans and their combinations.

Conventional and Government Loans:

Any mortgage loan other than FHA, VA or an RHS loan is conventional one.

FHA Loans:

The Federal Housing Administration called FHA, which is a part of the U.S. under Dept. of Housing and Urban Development (HUD), administers various mortgage loan programs. FHA loans have lower down payment requirements and are easier to qualify than conventional loans. FHA loans cannot exceed the statutory limit.

VA Loans:

VA loans are guaranteed by U.S. Government under Dept. of Veterans Affairs. The guaranty allows veterans and service persons to obtain home loans without a down payment with favorable loan terms. The VA loan is easy to qualify than a conventional loan. Lenders generally fix a limit to the maximum VA loan to $203,000. The U.S. Department of Veterans Affairs does not make loans, it guarantees loans made by lenders. After determining your eligibility and, if you are qualified, VA will issue you a certificate of eligibility to be used for applying of a VA loan.

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LOANS AVAILABLE TO PUBLIC IN UNITED STATES OF AMERICA.

Importance of Loans

Everyone has some desires and obligations for fulfilling their money based desires of various purposes such as home purchase, commercial use, students educational use etc., . In order to give the people a chance to come up with their desires in a convenient method there are financial organizations that offer various types of loans and same is the case with the US financial institutions.. Similarly, there are personal loans which are based on different reasons to be applied for like business loans, educational loans and so on.

Types of Loans offered in US

Although there are various types of loans available in US but we will be discussing some of the general types of loans offered in US like other states. There are basically two types of loans offered in US. First loans are conventional loans, which are provided by private mortgage companies in US and second, Government loans. US government also offers two loan programs to promote the housing schemes for the US residents like Federal Housing Authority (FHA) and Department of Veterans Affairs (VA) loans. Those US citizens who are not able to get other types of loans or the conventional loans may go for these types.

Home Loan:

Home loans in US have become more popular option among people for home financing or purchasing a home with the help of external funds. A large number of home loan financing agencies entered in the home loan market of the United States by making it more and more competitive. In the U.S., a home loan is basically refers to a mortgage loan. A mortgage loan is normally required for buying a house. In case of a home mortgage loan, the house which an individual is going to buy is used as security or pledge. The loan lender will not transfer the ownership title to the borrower until and unless the home loan is paid in full. If the borrower of mortgage loan makes a default in the loan repayment then the lender has the discretion to sell the house and use the sale proceeds for clearing the remaining home loan.

The home mortgage loan amount, which is going to be offered to the borrower, depends on the credit ratings and credit history of the person concerned. The majority of lenders do not intend to lend to people with bad credit history because they consider it to be risky. However, a number of subprime lenders or bad credit mortgage lenders in the country are ready to provide home loans to this kind of persons.

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