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Mortgage Loans Chattanooga Tennessee Greg Petree (Branch Manager) Kathy Cotsakis (Senior Loan Officer) Deeanna Jeffreys (Loan Officer)

 

Conventional Mortgage Loans vs. FHA Loans

Here we will sum up the two most common loan types out there: conventional loans and FHA loans. Let’s get right to it!

Conventional

Conventional loan products require a 5% down payment. This must be from the borrower’s own funds unless they are using  the Homepath or Homepath Renovation loan. Conventional products require Private Mortgage Insurance (PMI) if you borrow more than 80% of the sales price. This private mortgage insurance rate is determined by your down payment amount, length of the loan, and credit score. The better those things are, the better your PMI rate. Conventional products allow PMI to fall off once your principal is paid down to 78% of the home’s value.

Conventional loans typically favor borrowers with good credit, since the interest rates and PMI rates take the credit score into account.

Conventional loans allow a seller to pay up to 3% of the buyer’s closing costs at the closing table.

FHA

FHA loan products require a 3.5% down payment. This is allowed to be a gift from a family member, a loan or grant from a nonprofit organization or state-run instituation. Loan Simple currently requires at least a 580 credit score in order to provide FHA financing.

 

Unlike Conventional loans, FHA has an Up-Front Mortgage Insurance Premium of 1.75% of the loan amount. This premium is financed into the loan, so you pay interested on it for the life of the loan.

The monthly mortgage insurance rate for borrowers with a 3.5% down payment is currently 1.35% of the loan amount. This rate applies to everyone, regardless of credit score. HUD requires borrowers to keep this mortgage insurance for at least 5 years and most recently made the requirement that all 30 year mortgages must have the mortgage insurance for the life of the loan.

FHA allows for 6% seller-paid closing costs. 

The bottom line is that Conventional loans are geared for borrowers with good credit and a slightly larger down payment, while FHA loans are geared to provide a route for borrowers with lower credit scores and a limited down payment. With the new mortgage insurance guidelines on FHA loans it is typically better for a borrower to go the conventional route if their credit allows.

 

HomePath Mortgage

HomePath Mortgage allows a borrower to purchase a Fannie Mae-owned property with a low down payment, flexible mortgage terms, no lender-requested appraisal and no mortgage insurance. Expanded seller contributions to closing costs are allowed. read more

FHA Loans vs Conventional Loans

Here we will sum up the two most common loan types out there: conventional loans and FHA loans. Let’s get right to it! read more

USDA Rural Development Mortgage

With the USDA Rural Development option, you can borrow 100% of the appraised value. This means you don’t need to come up with the down payment. In fact, you can actually borrow 2% more than the appraised value, and use the extra to make some light repairs or home improvements. The main requirement for a USDA Rural Development mortgage is that the property must fall within certain geographical areas, outside the city limits of major metropolitan centers. read more

FHA Renovation Loan

What is an FHA 203k?

An FHA 203k loan is one of the more popular and easier to qualify renovation loans on the market right now. It is a loan backed by the federal government and intended to allow people to purchase and renovate a home with one loan. This is how it works: read more

HomePath Renovation Mortgage

Homepath Renovation Mortgage is a mortgage product that allows the borrower to make light to moderate repairs on a Fannie Mae-owned property and roll the costs of the renovations into the mortgage. read more

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A reverse mortgage is a special loan for senior citizens that allows them to convert a portion of their home equity into cash. Unlike a traditional mortgage or home equity line, borrowers are not required to make a house payment after borrowing the money as long as they use the home as their primary residence. A Reverse Mortgage can also be used for the purchase of a new home! Ask one of our loan officers for details on that. read more

Loan Simple
NMLS# 3032
8052 Standifer Gap, Suite A, Chattanooga, TN 37421
Branch NMLS# 386455

Equal Housing Lender

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