Types of Mortgage Loans, KeyBank, types of mortgages.#Types #of #mortgages


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Which of our mortgages is right for you?

Conventional Fixed Rate Mortgage

You plan to stay in your home for more than a few years.

Rate remains the same for the term of the loan.

Allows for easier budgeting.

Conventional Adjustable Rate Mortgage

You may want to sell or refinance early and can afford to make larger monthly payments should interest rates rise.

Interest rate adjusts periodically to reflect market condition within a predetermined time frame, and there may not be a cap on interest rate increases.

Lower initial rate can be locked in for different time periods, after which the interest rate and monthly payments may change.

Government (FHA/VA/HomeReady ® )

You qualify based on income and other factors.

You qualify for a VA home loan as a veteran or reservist.

FHA loans offer low down payment options and the ability to use gift funds for down payment and closing costs.

VA loans are partially guaranteed by the VA, so private lenders can provide better terms like 100% loan-to-value without mortgage insurance and no down payment in most cases.*

Jumbo Loan

You are in the market for a higher priced home.

Loan amounts up to $3.5 million with fixed- and adjustable-rate options.

SilverKey available for single family attached and detached, condos and Planned Unit Developments (PUDs).

GoldKey exclusive to Key Private Bank clients and for up to 90% LTV to $1 million with no PMI required.

Combination

You have funds for a 10% down payment.

You’ll have 2 simultaneous mortgages, one for 80% of the home’s value (LTV) and one for 10% LTV. The remaining 10% is your down payment.

Eliminates the need for Private Mortgage Insurance (PMI)

Community Professional

You qualify based on income, location or profession.

Community loans may offer low down payments.

Professional loans are tailored to financial realities of doctors and dentists.

State Bond

You are qualified as a first time home buyer in the state.

Various programs with features including competitive rates.

We’re in your neighborhood!

Have all your questions answered by an experienced mortgage loan officer near you.

Mon-Fri 8 a.m.- 8 p.m. EST

*Unless required by the lender, or if the purchase price exceeds the reasonable value of the property as determined by VA, or the loan is made with graduated payment features

NOTICE: This is not a commitment to lend or extend credit. Conditions and restrictions may apply. Information and offer are subject to change without notice. All loans are subject to credit and collateral approval.


Mortgage Types Compared – Guide To Your Mortgage Options, types of mortgages.#Types #of #mortgages


Mortgage Types Explained

Not every home buyer and borrower is the same. As such, there are plenty of mortgage programs available out there to meet the needs of various types of borrowers with very different financial backgrounds and needs.

The decision about which type of mortgage you choose is an important one. It’s essential to make sure you understand all your options before making the selection on which mortgage type is right for you.

Fixed-Rate Mortgages

The most popular type of mortgage is the fixed-rate mortgage. With this option, the interest rate is locked in and will remain the same throughout the duration of the term. Fixed-rate mortgages allow borrowers to make the same payment every month without having to worry about any fluctuations in their given interest rate.

It’s important to note, however, that the rate is only locked in and guaranteed for the term, and not the entire amortization period of the mortgage. For instance, if you agree to a 30-year mortgage with a 5-year term, your rate is locked in only for that 5-year period. Once the term expires, you’ll need to renegotiate a new rate at a new term, or opt for a completely different type of mortgage altogether.

The trade-off for such predictability is that these mortgages can often come with higher closing costs. In addition, they can be a little more challenging to get approved for versus some other types of mortgages. However, despite these disadvantages, obtaining a fixed-rate mortgage can make sense for many buyers, particularly first-timers.

Adjustable-Rate Mortgages

Contrary to the fixed-rate mortgage, an adjustable-rate mortgage (ARM) comes with an interest rate that fluctuates as the market dictates. This type of loan traditionally starts off with a low rate and adjusts over time. With ARMs, the rate will change during the term of the mortgage.

Generally speaking, such mortgages are initially set up like a standard loan based on the present interest rate. At regular intervals, the mortgage is reviewed, and should the market interest rate change, the lender will adjust the mortgage repayment plan accordingly. This can be done either by changing the length of the amortization period, the size of the payment, or a combination of both.

A popular variety of an adjustable-rate mortgage these days is the “hybrid ARM,” in which a certain interest rate is guaranteed to stay fixed for a certain time. This initial interest rate is often lower than what you would traditionally be offered with a traditional 30-year fixed loan.

Conventional Mortgages

A conventional – or conforming – mortgage is one that is not insured by the federal government, which means no guarantees are made to the lender should the borrower default on the mortgage payments. As such, they are considered higher risk for lenders. For this reason, borrowers typically need to have a high credit score, a healthy financial history, and a low debt-to-income ratio in order to get approved for a conventional loan.

If less than 20% is put towards a down payment, Freddie Mac and Fannie Mae guidelines stipulate that the lender needs to bring on a private insurer for the loan. Such Private Mortgage insurance (PMI) must be paid for by the borrower. However, once the borrower has paid down at least 20% of the property’s purchase price, payments for PMI will cease.

These types of mortgages follow the guidelines set by Fannie Mae and Freddie Mac, and may either be fixed- or adjustable-rate mortgages.

FHA Loans

For those who don’t meet the stringent requirements to get approved for a conventional loan, there are government-backed loan options available, such as FHA loans. These mortgages, which are guaranteed by the Federal Housing Administration, get a lot of attention from first-time home buyers and borrowers with less-than-perfect credit because of their more attractive features and easier lending requirements.

FHA mortgages offer low down payment requirements for those who may be unable to gather a large lump sum of money to put towards their home purchase. While the minimum down payment for a conventional mortgage is 5% of the purchase price of a home, FHA mortgages allow buyers to put down as little as 3.5%.

It should be noted that the Federal Housing Administration doesn’t actually issue the loans. Instead, it supports lenders should borrowers default on the mortgage payments.

Interest-Only Mortgages

Some borrowers choose an interest-only mortgage in an effort to keep their payments as low as possible. A mortgage is considered “interest only” if the monthly mortgage payments consist only of interest. This option lasts for a specified period, typically 5 to 10 years. Borrowers can pay more than interest if they choose to. No principle portion is paid, which means the only way equity can be built up during this interest-only time period is through appreciation.

By only being temporarily responsible for paying the interest portion, monthly payments are substantially less. It’s important to note, however, that reducing monthly mortgage payments will increase the overall interest that will need to be paid over the life of the mortgage, and lowers the amount of home equity that will be gained. That’s why such an option should only be temporary in nature.

Home Equity Loans

Also referred to as second mortgages, home equity loans allow homeowners to borrow money against the equity already built up in the home. They are an attractive option for those who need to cover a large expense, such as a major home renovation where a large sum of money is required up front. With these types of loans, homeowners can borrow up to $100,000 of equity and still be able to deduct all of the interest upon filing their tax returns.

There are two types of home equity loans: fixed-rate loans and lines of credit. Both of these variations typically range from 5 to 15 years, and must be repaid in full when the home is sold.

The fixed-rate variation offers a single lump sum of money to the homeowner, which then needs to be repaid over a certain time period at a specific interest rate.

With a home equity line of credit (HELOC), homeowners can borrow against the equity in their homes similar to the way a credit card works. They are allowed to borrow a set limit, and can withdraw as little or as much as needed at any time, as long as this limit is not exceeded. Only the amount withdrawn is charged interest, and once the money is repaid, it can be borrowed again and again until the end of the loan term is reached.

Related Resources

Types of mortgages

Do you have questions about a mortgage? You have come to the right place. Check here for any topic regarding mortgages answered by our financial experts.

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Interest Only Calculator

This handy calculator can help you determine what your savings and ultimate cost with an interest only mortgage verses a traditional home loan.

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Early Pay Off

Our early payoff calculator tells you exactly how much more it will cost per month to pay your mortgage off early based on a shorter payment term.

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Mortgage Calculator

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Types of Mortgage Loans and Home Loan Programs, The Truth About, mortgage types.#Mortgage #types


Loan Types and Programs

Mortgage types

There are an infinite number of loan types out there, and lenders are constantly coming up with creative ways to wrangle in new homeowners. The type of home loan you choose can make or break you as a borrower, so make sure you fully understand it before making any kind of commitment.

These days you ll probably come across ridiculous loan programs that seemingly allow anyone to qualify for a home loan. There are 1% start rate loans, often referred to as neg-ams or pick-a-payment programs, and 40-yr and 50-yr loans that stretch the mortgage payment out over what seems like a lifetime.

Most prospective homeowners these days seem to be interested in 100% financing, generally because they have don t have the assets necessary for a down payment. Unfortunately, the proliferation of these types of home loan programs have increased the number of high-risk borrowers in the United States at an alarming rate.

That may explain the surge in mortgage defaults and foreclosures over the past several years.

But if you take the time to educate yourself on the many home loan types out there, you ll effectively decrease your chances of defaulting on your mortgage. That said, let s talk about the many different loan types and programs available today.

Before getting into specific loan programs, I want to highlight the types of loans available to potential homeowners.

Conforming Loans and Non-Conforming Loans

One way home loans are differentiated is by their GSE eligibility. If the loan meets requirements set forth by Fannie Mae and Freddie Mac, it is considered a conforming loan. If the loan doesn s meet all the underwriting requirements set forth by the pair of GSEs, it is considered non-conforming.

One of the main guidelines that determines whether a mortgage is conforming or not is loan amount. Generally, a mortgage with a loan amount below $417,000 is considered conforming, whereas any loan amount above $417,000 is considered a jumbo loan. However, in Alaska and Hawaii the confirming limit is $625,500.Note that the conforming limit may change annually, and has risen quite a bit in the past few years as housing prices skyrocketed.

A jumbo loan may meet all of Fannie Mae and Freddie Mac’s loan underwriting guidelines, but if the loan amount exceeds the conforming limit, it will be considered non-conforming and carry a higher mortgage rate as a result.

If your loan amount is on the fringe of the conforming limit, sometimes simply dropping your loan amount a few thousand dollars can lower your mortgage rate tremendously, so keep this in mind anytime your loan amount is near the limit.

Conventional Loans and Government Loans

Mortgages are also classified as either conventional loans or government loans. Conventional loans can be conforming or jumbo, but are not insured or guaranteed by the government.

Then there are government loans, such as the widely popular FHA loan. This type of mortgage is backed by the Federal Housing Administration (FHA). Another common government loan is the VA loan, backed by the Department of Veteran Affairs. The max loan amount for these types of loans varies by county. There s even a USDA home loan backed by the same folks that grade steaks!

Now that you know a bit about different home loan types, we can focus on home loan programs. As I mentioned earlier, there are a ton of different loan programs out there, and more seem to surface everyday. Let s start with the most basic of loan programs, the 30-year fixed-rate loan.

The 30-year fixed loan is as simple as they come. Most mortgages are based on a 30-year amortization, and the 30-year fixed is no different.

The 30-year fixed loan is just how it sounds, a loan with a 30-year term that is fixed for 30 years. What this is means is that the loan will take 30 years to pay off, and the rate will stay fixed during those entire 30 years. There isn t much else to it.

Let s say you secure a rate of 6.5% on a 30-year fixed loan with a loan amount of $500,000. You ll have monthly mortgage payments of $3160.34 for a total of 360 months, or 30 years. You will be required to pay the same amount each month until the loan is paid off. So the total amount you would pay on a $500,000 loan at 6.5% over 30 years would be $1,137,722.40.

Total Interest Paid over Life of Loan: $637,722.44

Interest Paid in 2006: $32,335.45

Interest Paid in 2007: $31,961.17

Average Monthly Interest Paid over Life of Loan: $1,771.45

You will also need to pay taxes and insurance on top of this mortgage payment, so keep that in mind when figuring out how much house you can afford.

This sounds steep, but most people don t stay in a 30-year loan for 30 years. They either pay it down quicker by making higher monthly payments (biweekly mortgage payments), or they may sell or refinance the loan.

Another common and simple to understand loan is the 15-year fixed loan. This works exactly like the 30-year loan except the same fixed payment is made in half the time, 180 months or 15 years. Obviously the payment will be much higher, but you will pay less interest and gain more home equity in a shorter amount of time. People who have an ample amount of income usually prefer this type of loan to reduce the overall cost of financing a mortgage.

This is how it breaks down:

Total Interest Paid over Life of Loan: $283,996.63

Interest Paid in 2006: $31,900.36

Interest Paid in 2007: $30,536.41

Average Monthly Interest Paid over Life of Loan: $1,577.76

The monthly payment is significantly higher, but the amount of total interest paid over the life of the loan is much less. Because you re putting more money towards the equity of the home, you paying less interest each month, which you ll see as the $1.577.76 figure as compared to the $1,771.45 you d pay on a 30yr fixed loan. That s nearly $200 a month that you would save in interest charges by electing to take a 15-year fixed mortgage.

Although the monthly payment is markedly higher than the 30 year fixed mortgage, the total interest paid during the 15 year loan is substantially lower. It may seem like the obvious choice, but it s more complicated if you factor in tax deductions and the power of leverage. Not to mention if you can afford a monthly mortgage payment that high.

Learn about other types of mortgage programs including:


Buy-to-let mortgages with HSBC Expat – Types of rate – HSBC Expat, types of mortgages.#Types


Buy-to-let mortgages with HSBC Expat – Types of rate

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  • Buy to let mortgages

    Buy to Let rates

    HSBC are not able to provide mortgages to residents of all countries. Subject to confirmation that you meet the applicable eligibility criteria and depending upon your country of residence, individual circumstances and your requirements buy to let mortgages may be provided by either HSBC Expat or HSBC Bank plc, based in the UK.

    Choose between tracker or fixed interest rates

    HSBC Expat and HSBC Bank plc, in the UK, offer tracker interest rates. HSBC Bank plc, in the UK, also offer fixed interest rates. Before you proceed with a mortgage you should make sure you can afford the monthly payments.

    Tracker interest rate

    Available from HSBC Expat

    The tracker mortgage interest rate is set at an agreed percentage above the Bank of England base rate. The monthly payments rise and fall (track) in line with changes to the base rate.

    • No early repayment charge
    • Make unlimited overpayments
    • Make lump sum reductions
    • Repay your loan at any time

    The following tracker mortgage interest rates are available from HSBC Expat Only:

    The Bank of England Base Rate is set by the Bank of England. HSBC Tracker mortgage interest rates are linked with a margin above this Base Rate.

    This is the percentage rate at which the lender calculates the interest that is charged the borrower on a mortgage.

    APR stands for the Annual Percentage Rate of charge used to compare loan offers.

    The period during which the fixed or tracker rate applies. Following the expiry of the fixed rate period, the mortgage rate will revert to the HSBC buy to let mortgage variable rate.

    A fee charged on some mortgages to secure a particular mortgage deal and/or to cover administration costs.

    The fee charged for the administration involved in arranging the loan.

    The maximum amount that can be borrowed with this product.

    For information on the tracker mortgage interest rates available from HSBC Bank plc, in the UK visit:

    Fixed interest rate

    Available from HSBC Bank plc, in the UK, only.

    A fixed rate mortgage provides the security of fixed mortgage payments until an agreed date, no matter what happens to interest rates. HSBC Bank plc, in the UK fixed rate mortgages revert to the HSBC variable rate at the end of the fixed rate period.

    An Early Repayment Charge applies if you increase your standard monthly payment by more than 20% or you repay (by any other method) all or part of your mortgage, over and above your standard monthly payment, during a fixed rate period.

    For information on the fixed mortgage interest rates available from HSBC Bank plc, in the UK visit:

    Understanding fees

    A number of different fees are chargeable for different types of mortgages. The table below explains some of the fees involved and provides amounts where possible.

    A non refundable fee charged on some mortgages to secure a particular mortgage deal and/or to cover administration costs.

    The fee charged for the administration involved in arranging the loan.

    The fee charged by a lender who, with the customer’s written consent, requests details from their existing mortgage lender.

    A Completion fee is a fee the lender charges to cover the cost of electronically transferring the mortgage funds to the borrower.

    Also referred to as a professional valuation, a Standard Valuation Fee is a fee to cover the basic valuation of a property conducted on behalf of a mortgage lender to enable them to assess the security offered by the property for the proposed mortgage.

    An exit fee is a fee charged by many institutions when you fully repay your mortgage. HSBC Bank do not charge an exit fee.

    Standard Valutation fee scale

    The current fee, including VAT (UK only), for HSBC Expat, Buy to Let property valuations is detailed below. Fees are subject to change, therefore, please refer to your Key Facts Illustration for details of the fees payable by you. The valuation fee quoted includes a 35 non-refundable administration fee. Please note this fee scale is not applicable to properties in the Channel Islands and Isle of Man. For such properties please refer to your local HSBC Bank plc, in the UK branch.


    Different Types of Mortgage Loans Explained – 2017 Update, types of mortgages.#Types #of #mortgages


    The Different Types of Mortgage Loans in 2017, Explained

    By Brandon Cornett | 2017, all rights reserved | Duplication prohibited

    What are the different types of mortgage loans available to home buyers in 2017, and what are the pros and cons of each? This is one of the most common questions we receive here at the Home Buying Institute. This page offers some basic information about the types of loans available in 2017. Follow the hyperlinks provided for even more information. And be sure to send us your questions!

    Types of mortgages

    Loan Reps Are Standing By

    Did you know you can get free, no-obligation mortgage quotes online? It’s a great way to get the ball rolling.

    If you already understand the basic types of home loans, and you’re ready to move forward with the process, use one of the links provided below. Otherwise, keep reading below to learn about the different financing options available in 2017. You can always come back to these links later on.

    Types of Mortgages Available in 2017, Explained

    There are many different types of mortgages available to home buyers. They are all thoroughly explained on this website. But here, for the sake of simplicity, we have boiled it all down to the following options and categories.

    Option 1: Fixed vs. Adjustable Rate

    As a borrower, one of your first choices is whether you want a fixed-rate or an adjustable-rate mortgage loan. All loans fit into one of these two categories, or a combination hybrid category. Here’s the primary difference between the two types:

    • Fixed-rate mortgage loans have the same interest rate for the entire repayment term. Because of this, the size of your monthly payment will stay the same, month after month, and year after year. It will never change. This is true even for long-term financing options, such as the 30-year fixed-rate loan. It has the same interest rate, and the same monthly payment, for the entire term.
    • Adjustable-rate mortgage loans (ARMs) have an interest rate that will change or adjust from time to time. Typically, the rate on an ARM will change every year after an initial period of remaining fixed. It is therefore referred to as a hybrid product. A hybrid ARM loan is one that starts off with a fixed or unchanging interest rate, before switching over to an adjustable rate. For instance, the 5/1 ARM loan carries a fixed rate of interest for the first five years, after which it begins to adjust every one year, or annually. That’s what the 5 and the 1 signify in the name.

    As you might imagine, both of these types of mortgages have certain pros and cons associated with them. Use the link above for a side-by-side comparison of these pros and cons. Here they are in a nutshell: The ARM loan starts off with a lower rate than the fixed type of loan, but it has the uncertainty of adjustments later on. With an adjustable mortgage product, the rate and monthly payments can rise over time. The primary benefit of a fixed loan is that the rate and monthly payments never change. But you will pay for that stability through higher interest charges, when compared to the initial rate of an ARM.

    Option 2: Government-Insured vs. Conventional Loans

    So you’ll have to choose between a fixed and adjustable-rate type of mortgage, as explained in the previous section. But there are other choices as well. You’ll also have to decide whether you want to use a government-insured home loan (such as FHA or VA), or a conventional regular type of loan. The differences between these two mortgage types are covered below.

    A conventional home loan is one that is not insured or guaranteed by the federal government in any way. This distinguishes it from the three government-backed mortgage types explained below (FHA, VA and USDA).

    Government-insured home loans include the following:

    The Federal Housing Administration (FHA) mortgage insurance program is managed by the Department of Housing and Urban Development (HUD), which is a department of the federal government. FHA loans are available to all types of borrowers, not just first-time buyers. The government insures the lender against losses that might result from borrower default. Advantage: This program allows you to make a down payment as low as 3.5% of the purchase price. Disadvantage: You’ll have to pay for mortgage insurance, which will increase the size of your monthly payments.

    The U.S. Department of Veterans Affairs (VA) offers a loan program to military service members and their families. Similar to the FHA program, these types of mortgages are guaranteed by the federal government. This means the VA will reimburse the lender for any losses that may result from borrower default. The primary advantage of this program (and it’s a big one) is that borrowers can receive 100% financing for the purchase of a home. That means no down payment whatsoever.

    USDA / RHS Loans

    The United States Department of Agriculture (USDA) offers a loan program for rural borrowers who meet certain income requirements. The program is managed by the Rural Housing Service (RHS), which is part of the Department of Agriculture. This type of mortgage loan is offered to rural residents who have a steady, low or modest income, and yet are unable to obtain adequate housing through conventional financing. Income must be no higher than 115% of the adjusted area median income [AMI]. The AMI varies by county. See the link below for details.

    Combining: It’s important to note that borrowers can combine the types of mortgage types explained above. For example, you might choose an FHA loan with a fixed interest rate, or a conventional home loan with an adjustable rate (ARM).

    Option 3: Jumbo vs. Conforming Loan

    There is another distinction that needs to be made, and it’s based on the size of the loan. Depending on the amount you are trying to borrow, you might fall into either the jumbo or conforming category. Here’s the difference between these two mortgage types.

    • A conforming loan is one that meets the underwriting guidelines of Fannie Mae or Freddie Mac, particularly where size is concerned. Fannie and Freddie are the two government-controlled corporations that purchase and sell mortgage-backed securities (MBS). Simply put, they buy loans from the lenders who generate them, and then sell them to investors via Wall Street. A conforming loan falls within their maximum size limits, and otherwise conforms to pre-established criteria.
    • A jumbo loan, on the other hand, exceeds the conforming loan limits established by Fannie Mae and Freddie Mac. This type of mortgage represents a higher risk for the lender, mainly due to its size. As a result, jumbo borrowers typically must have excellent credit and larger down payments, when compared to conforming loans. Interest rates are generally higher with the jumbo products, as well.

    This page explains the different types of mortgage loans available in 2017. But it only provides a brief overview of each type. Follow the hyperlinks provided above to learn more about each option. We also encourage you to continue your research beyond this website. Education is the key to making smart decisions, as a home buyer or mortgage shopper.


    Types of Mortgage Lenders, The Truth About, mortgage types.#Mortgage #types


    Types of Mortgage Lenders

    Mortgage types

    Mortgage bankers are essentially mortgage lenders that originate and sell their loans in pools on the secondary market to investors such as Freddie Mac and Fannie Mae, along with private investors. If they are non-depository institutions, they finance the loans with warehouse lines of credit extended by other lenders, but quickly sell them off on the secondary market so they can originate new loans. Chase, Quicken, and Wells Fargo Home Mortgage are three of the largest examples, though much smaller operations also share this distinction.

    Portfolio Mortgage Lenders

    Portfolio mortgage lenders originate and fund their own loans, and may service them for the entire life of the loan. Because they typically offer deposit accounts to consumers, they are able to hold onto the loans they fund. They are also able to offer more flexibility in loan products and loan programs because they don t need to adhere to the guidelines of secondary market buyers. That means unique program guidelines and special offerings that other banks can t offer. Once their loans are serviced and paid for on time for at least a year, they are considered seasoned and can be sold on the secondary market more easily. Bank of America, Chase, and Wells Fargo are examples of portfolio mortgage lenders.

    Correspondent Mortgage Lenders

    Correspondent mortgage lenders originate and fund loans in their own name, then sell them off to larger mortgage lenders, who in turn service them, or sell them on the secondary market. The loans can be underwritten by the correspondent mortgage lenders, but the loan programs are usually based on terms approved by the larger mortgage lender, or sponsor . Correspondents usually have a array of products from different sponsors, and act as an extension for those larger lenders. In other words, a small correspondent mortgage lender may resell Wells Fargo products and/or Chase products under their own name.

    A direct mortgage lender is simply a bank or lender that works directly with a homeowner and underwrites their product in-house, with no need for a middleman or broker. Mortgage bankers and portfolio lenders usually fall under this category if they have retail operations. Examples include SoFi, loanDepot, Wells Fargo and Bank of America, though smaller entities could share this distinction as well.

    Wholesale Mortgage Lenders

    Wholesale mortgage lenders are similar to mortgage bankers in that they originate and sometimes service loans, and also sell them on the secondary market. Many mortgage banks have wholesale and retail divisions, although wholesale lenders can be independent entities as well.

    A wholesale mortgage lender is distinct because it works with independent mortgage brokers, who are client-facing. These brokers work on the retail end with borrowers and handle all correspondence, while simultaneously working with an Account Executive at the wholesale mortgage lender to carry out processing, underwriting, and loan funding. The borrower never actually interacts with the lender, only the broker does.

    The wholesale mortgage lender funds the loan, and will usually sell it on the secondary market within a month or two. Some examples include United Wholesale Mortgage and Carrington Mortgage Services.

    Warehouse lenders provide financing to other mortgage lenders so they can originate their own mortgages. This short-term funding provides smaller lenders with liquidity so they can focus on making more mortgages while selling existing ones on the secondary market.

    Smaller mortgage bankers and correspondent lenders rely on warehouse lines of credit to finance their operations. They pay back the warehouse lines of credit whens loans are sold, and may give a cut to the warehouse lender for each loan that is eventually sold. The mortgages are used as collateral for the temporary financing.

    Subprime Mortgage Lenders

    Subprime lenders tend to focus on homeowners with less than stellar credit. While the definition of subprime varies from lender to lender, most in the industry characterize it as lending to borrowers with credit scores below 620. But other issues may persist, including limited income and assets, or inability to provide documentation. As a result, interest rates provided by subprime mortgage lenders will be much higher than those at standard lenders. Essentially, subprime lenders are willing to take on more risk for a greater reward (a sky-high interest rate).

    This category has since been replaced by non-QM lenders, who make loans that fall outside the Qualified Mortgage (QM) rule. However, loan quality today might be better than that of their predecessors so a straight up comparison isn t entirely fair.

    Alt-A mortgage lenders typically offer mortgages to borrowers with limited documentation, limited or no down payment, and/or credit scores mostly between 620-720. This type of mortgage lender falls somewhere between a prime lender and a subprime lender. Borrowers may use an Alt-A mortgage lender because they have a tricky loan scenario or a sticking point that makes it difficult or impossible to close with a traditional mortgage lender. The risk appetite of an Alt-A lender is medium-high.

    Mortgage brokers work independently with both banks/mortgage lenders and borrowers, and need to be licensed. Their job is to contact borrowers and bring in potential deals. Once they have a deal, they can send it to a mortgage bank or a wholesale lender. They need to process the loan once it is approved, and can negotiate pricing with the bank or mortgage lender to receive a rebate, known as a yield spread premium. Mortgage brokers may form partnerships with real estate agents to ensure a steady stream of new business.

    Loan officers work at retail banks or under mortgage brokers, and basically do the same thing a broker would do, except they don t need to be licensed. They solicit borrowers using direct mail, telemarketing, and similar practices. Brokers usually provide them with office supplies and leads, and each take a split of the total commission. They may not need be well experienced, so take caution if and when one solicits you to ensure they are well educated on mortgages.

    Related: Take a look at the top mortgage lenders in the second quarter of 2010.


    Types of Mortgage Loans and Home Loan Programs, The Truth About, mortgage types.#Mortgage #types


    Loan Types and Programs

    Mortgage types

    There are an infinite number of loan types out there, and lenders are constantly coming up with creative ways to wrangle in new homeowners. The type of home loan you choose can make or break you as a borrower, so make sure you fully understand it before making any kind of commitment.

    These days you ll probably come across ridiculous loan programs that seemingly allow anyone to qualify for a home loan. There are 1% start rate loans, often referred to as neg-ams or pick-a-payment programs, and 40-yr and 50-yr loans that stretch the mortgage payment out over what seems like a lifetime.

    Most prospective homeowners these days seem to be interested in 100% financing, generally because they have don t have the assets necessary for a down payment. Unfortunately, the proliferation of these types of home loan programs have increased the number of high-risk borrowers in the United States at an alarming rate.

    That may explain the surge in mortgage defaults and foreclosures over the past several years.

    But if you take the time to educate yourself on the many home loan types out there, you ll effectively decrease your chances of defaulting on your mortgage. That said, let s talk about the many different loan types and programs available today.

    Before getting into specific loan programs, I want to highlight the types of loans available to potential homeowners.

    Conforming Loans and Non-Conforming Loans

    One way home loans are differentiated is by their GSE eligibility. If the loan meets requirements set forth by Fannie Mae and Freddie Mac, it is considered a conforming loan. If the loan doesn s meet all the underwriting requirements set forth by the pair of GSEs, it is considered non-conforming.

    One of the main guidelines that determines whether a mortgage is conforming or not is loan amount. Generally, a mortgage with a loan amount below $417,000 is considered conforming, whereas any loan amount above $417,000 is considered a jumbo loan. However, in Alaska and Hawaii the confirming limit is $625,500.Note that the conforming limit may change annually, and has risen quite a bit in the past few years as housing prices skyrocketed.

    A jumbo loan may meet all of Fannie Mae and Freddie Mac’s loan underwriting guidelines, but if the loan amount exceeds the conforming limit, it will be considered non-conforming and carry a higher mortgage rate as a result.

    If your loan amount is on the fringe of the conforming limit, sometimes simply dropping your loan amount a few thousand dollars can lower your mortgage rate tremendously, so keep this in mind anytime your loan amount is near the limit.

    Conventional Loans and Government Loans

    Mortgages are also classified as either conventional loans or government loans. Conventional loans can be conforming or jumbo, but are not insured or guaranteed by the government.

    Then there are government loans, such as the widely popular FHA loan. This type of mortgage is backed by the Federal Housing Administration (FHA). Another common government loan is the VA loan, backed by the Department of Veteran Affairs. The max loan amount for these types of loans varies by county. There s even a USDA home loan backed by the same folks that grade steaks!

    Now that you know a bit about different home loan types, we can focus on home loan programs. As I mentioned earlier, there are a ton of different loan programs out there, and more seem to surface everyday. Let s start with the most basic of loan programs, the 30-year fixed-rate loan.

    The 30-year fixed loan is as simple as they come. Most mortgages are based on a 30-year amortization, and the 30-year fixed is no different.

    The 30-year fixed loan is just how it sounds, a loan with a 30-year term that is fixed for 30 years. What this is means is that the loan will take 30 years to pay off, and the rate will stay fixed during those entire 30 years. There isn t much else to it.

    Let s say you secure a rate of 6.5% on a 30-year fixed loan with a loan amount of $500,000. You ll have monthly mortgage payments of $3160.34 for a total of 360 months, or 30 years. You will be required to pay the same amount each month until the loan is paid off. So the total amount you would pay on a $500,000 loan at 6.5% over 30 years would be $1,137,722.40.

    Total Interest Paid over Life of Loan: $637,722.44

    Interest Paid in 2006: $32,335.45

    Interest Paid in 2007: $31,961.17

    Average Monthly Interest Paid over Life of Loan: $1,771.45

    You will also need to pay taxes and insurance on top of this mortgage payment, so keep that in mind when figuring out how much house you can afford.

    This sounds steep, but most people don t stay in a 30-year loan for 30 years. They either pay it down quicker by making higher monthly payments (biweekly mortgage payments), or they may sell or refinance the loan.

    Another common and simple to understand loan is the 15-year fixed loan. This works exactly like the 30-year loan except the same fixed payment is made in half the time, 180 months or 15 years. Obviously the payment will be much higher, but you will pay less interest and gain more home equity in a shorter amount of time. People who have an ample amount of income usually prefer this type of loan to reduce the overall cost of financing a mortgage.

    This is how it breaks down:

    Total Interest Paid over Life of Loan: $283,996.63

    Interest Paid in 2006: $31,900.36

    Interest Paid in 2007: $30,536.41

    Average Monthly Interest Paid over Life of Loan: $1,577.76

    The monthly payment is significantly higher, but the amount of total interest paid over the life of the loan is much less. Because you re putting more money towards the equity of the home, you paying less interest each month, which you ll see as the $1.577.76 figure as compared to the $1,771.45 you d pay on a 30yr fixed loan. That s nearly $200 a month that you would save in interest charges by electing to take a 15-year fixed mortgage.

    Although the monthly payment is markedly higher than the 30 year fixed mortgage, the total interest paid during the 15 year loan is substantially lower. It may seem like the obvious choice, but it s more complicated if you factor in tax deductions and the power of leverage. Not to mention if you can afford a monthly mortgage payment that high.

    Learn about other types of mortgage programs including:


    What Types Of Mortgages Can I Get, Experian, mortgage types.#Mortgage #types


    Types of mortgages

    Mortgage types

    Also in this section.

    There are a variety of mortgages out there, to suit people with different preferences and financial circumstances. Types of mortgages include:

    These mortgages are aimed at people buying their first home and balance the best rates available against income, expenses and credit information.

    Remortgaging involves either taking out a new loan with either a new or existing lender and paying your old mortgage off with it.

    This is where you only pay off the interest on the mortgage each month. Your monthly payment is generally quite a bit less as there is no capital to pay off however you still have to pay off the capital at the end of the term.

    These mortgages are available if you are looking to move house, where you can port your existing mortgage and take any additional borrowing you may need on a new mortgage product or start a new mortgage from scratch.

    These are usually for landlords who already own one property, but buy another property to rent out. Buy to Let mortgages tend to come with higher interest rates and a minimum deposit of around 25% of the property’s value although a number of lenders will accept a lower, 20% deposit.

    Typically allow first-time or existing buyers without a large deposit to get onto, or move up, the housing ladder, with help from the government. This could help them access lower deposit mortgages.

    Fixed, tracker or variable?

    Mortgages are available on a fixed or variable rate of interest.

    Where your interest rate is fixed for a set period of time. The main advantage is you know exactly what you will be paying each month, but the flipside is that you will not benefit from falling interest rates.

    This is where you mortgage tracks a pre-arranged independently set interest rate i.e. the Bank of England base rate for an agreed period.

    Here, the interest rate on your mortgage is set by your bank or building society and it is subject to change at your lender’s discretion.

    CreditMatcher helps you compare first time buyer, home mover and re-mortgage deals on fixed rate or variable rate terms.

    Compare mortgages with Experian CreditMatcher

    Experian is a credit broker and not a lender

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    Experian acts as a credit broker and not a lender in the provision of its credit cards and personal, car finance and guarantor loans matching services, meaning it will show you products offered by lenders and other brokers.

    Experian acts independently and although CreditMatcher shows products for a range of lenders and other brokers it does not cover the whole of the market, meaning other products may be available to you. CreditMatcher services are provided free however we will receive commission payments from lenders or brokers we introduce you to. For information about the commission we receive from brokers for mortgages and secured loans click here.

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    Mortgage types


    Different Types of Mortgage Loans Explained – 2017 Update, types of mortgages.#Types #of #mortgages


    The Different Types of Mortgage Loans in 2017, Explained

    By Brandon Cornett | 2017, all rights reserved | Duplication prohibited

    What are the different types of mortgage loans available to home buyers in 2017, and what are the pros and cons of each? This is one of the most common questions we receive here at the Home Buying Institute. This page offers some basic information about the types of loans available in 2017. Follow the hyperlinks provided for even more information. And be sure to send us your questions!

    Types of mortgages

    Loan Reps Are Standing By

    Did you know you can get free, no-obligation mortgage quotes online? It’s a great way to get the ball rolling.

    If you already understand the basic types of home loans, and you’re ready to move forward with the process, use one of the links provided below. Otherwise, keep reading below to learn about the different financing options available in 2017. You can always come back to these links later on.

    Types of Mortgages Available in 2017, Explained

    There are many different types of mortgages available to home buyers. They are all thoroughly explained on this website. But here, for the sake of simplicity, we have boiled it all down to the following options and categories.

    Option 1: Fixed vs. Adjustable Rate

    As a borrower, one of your first choices is whether you want a fixed-rate or an adjustable-rate mortgage loan. All loans fit into one of these two categories, or a combination hybrid category. Here’s the primary difference between the two types:

    • Fixed-rate mortgage loans have the same interest rate for the entire repayment term. Because of this, the size of your monthly payment will stay the same, month after month, and year after year. It will never change. This is true even for long-term financing options, such as the 30-year fixed-rate loan. It has the same interest rate, and the same monthly payment, for the entire term.
    • Adjustable-rate mortgage loans (ARMs) have an interest rate that will change or adjust from time to time. Typically, the rate on an ARM will change every year after an initial period of remaining fixed. It is therefore referred to as a hybrid product. A hybrid ARM loan is one that starts off with a fixed or unchanging interest rate, before switching over to an adjustable rate. For instance, the 5/1 ARM loan carries a fixed rate of interest for the first five years, after which it begins to adjust every one year, or annually. That’s what the 5 and the 1 signify in the name.

    As you might imagine, both of these types of mortgages have certain pros and cons associated with them. Use the link above for a side-by-side comparison of these pros and cons. Here they are in a nutshell: The ARM loan starts off with a lower rate than the fixed type of loan, but it has the uncertainty of adjustments later on. With an adjustable mortgage product, the rate and monthly payments can rise over time. The primary benefit of a fixed loan is that the rate and monthly payments never change. But you will pay for that stability through higher interest charges, when compared to the initial rate of an ARM.

    Option 2: Government-Insured vs. Conventional Loans

    So you’ll have to choose between a fixed and adjustable-rate type of mortgage, as explained in the previous section. But there are other choices as well. You’ll also have to decide whether you want to use a government-insured home loan (such as FHA or VA), or a conventional regular type of loan. The differences between these two mortgage types are covered below.

    A conventional home loan is one that is not insured or guaranteed by the federal government in any way. This distinguishes it from the three government-backed mortgage types explained below (FHA, VA and USDA).

    Government-insured home loans include the following:

    The Federal Housing Administration (FHA) mortgage insurance program is managed by the Department of Housing and Urban Development (HUD), which is a department of the federal government. FHA loans are available to all types of borrowers, not just first-time buyers. The government insures the lender against losses that might result from borrower default. Advantage: This program allows you to make a down payment as low as 3.5% of the purchase price. Disadvantage: You’ll have to pay for mortgage insurance, which will increase the size of your monthly payments.

    The U.S. Department of Veterans Affairs (VA) offers a loan program to military service members and their families. Similar to the FHA program, these types of mortgages are guaranteed by the federal government. This means the VA will reimburse the lender for any losses that may result from borrower default. The primary advantage of this program (and it’s a big one) is that borrowers can receive 100% financing for the purchase of a home. That means no down payment whatsoever.

    USDA / RHS Loans

    The United States Department of Agriculture (USDA) offers a loan program for rural borrowers who meet certain income requirements. The program is managed by the Rural Housing Service (RHS), which is part of the Department of Agriculture. This type of mortgage loan is offered to rural residents who have a steady, low or modest income, and yet are unable to obtain adequate housing through conventional financing. Income must be no higher than 115% of the adjusted area median income [AMI]. The AMI varies by county. See the link below for details.

    Combining: It’s important to note that borrowers can combine the types of mortgage types explained above. For example, you might choose an FHA loan with a fixed interest rate, or a conventional home loan with an adjustable rate (ARM).

    Option 3: Jumbo vs. Conforming Loan

    There is another distinction that needs to be made, and it’s based on the size of the loan. Depending on the amount you are trying to borrow, you might fall into either the jumbo or conforming category. Here’s the difference between these two mortgage types.

    • A conforming loan is one that meets the underwriting guidelines of Fannie Mae or Freddie Mac, particularly where size is concerned. Fannie and Freddie are the two government-controlled corporations that purchase and sell mortgage-backed securities (MBS). Simply put, they buy loans from the lenders who generate them, and then sell them to investors via Wall Street. A conforming loan falls within their maximum size limits, and otherwise conforms to pre-established criteria.
    • A jumbo loan, on the other hand, exceeds the conforming loan limits established by Fannie Mae and Freddie Mac. This type of mortgage represents a higher risk for the lender, mainly due to its size. As a result, jumbo borrowers typically must have excellent credit and larger down payments, when compared to conforming loans. Interest rates are generally higher with the jumbo products, as well.

    This page explains the different types of mortgage loans available in 2017. But it only provides a brief overview of each type. Follow the hyperlinks provided above to learn more about each option. We also encourage you to continue your research beyond this website. Education is the key to making smart decisions, as a home buyer or mortgage shopper.


    Buy-to-let mortgages with HSBC Expat – Types of rate – HSBC Expat, types of mortgages.#Types


    Buy-to-let mortgages with HSBC Expat – Types of rate

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  • Buy to let mortgages

    Buy to Let rates

    HSBC are not able to provide mortgages to residents of all countries. Subject to confirmation that you meet the applicable eligibility criteria and depending upon your country of residence, individual circumstances and your requirements buy to let mortgages may be provided by either HSBC Expat or HSBC Bank plc, based in the UK.

    Choose between tracker or fixed interest rates

    HSBC Expat and HSBC Bank plc, in the UK, offer tracker interest rates. HSBC Bank plc, in the UK, also offer fixed interest rates. Before you proceed with a mortgage you should make sure you can afford the monthly payments.

    Tracker interest rate

    Available from HSBC Expat

    The tracker mortgage interest rate is set at an agreed percentage above the Bank of England base rate. The monthly payments rise and fall (track) in line with changes to the base rate.

    • No early repayment charge
    • Make unlimited overpayments
    • Make lump sum reductions
    • Repay your loan at any time

    The following tracker mortgage interest rates are available from HSBC Expat Only:

    The Bank of England Base Rate is set by the Bank of England. HSBC Tracker mortgage interest rates are linked with a margin above this Base Rate.

    This is the percentage rate at which the lender calculates the interest that is charged the borrower on a mortgage.

    APR stands for the Annual Percentage Rate of charge used to compare loan offers.

    The period during which the fixed or tracker rate applies. Following the expiry of the fixed rate period, the mortgage rate will revert to the HSBC buy to let mortgage variable rate.

    A fee charged on some mortgages to secure a particular mortgage deal and/or to cover administration costs.

    The fee charged for the administration involved in arranging the loan.

    The maximum amount that can be borrowed with this product.

    For information on the tracker mortgage interest rates available from HSBC Bank plc, in the UK visit:

    Fixed interest rate

    Available from HSBC Bank plc, in the UK, only.

    A fixed rate mortgage provides the security of fixed mortgage payments until an agreed date, no matter what happens to interest rates. HSBC Bank plc, in the UK fixed rate mortgages revert to the HSBC variable rate at the end of the fixed rate period.

    An Early Repayment Charge applies if you increase your standard monthly payment by more than 20% or you repay (by any other method) all or part of your mortgage, over and above your standard monthly payment, during a fixed rate period.

    For information on the fixed mortgage interest rates available from HSBC Bank plc, in the UK visit:

    Understanding fees

    A number of different fees are chargeable for different types of mortgages. The table below explains some of the fees involved and provides amounts where possible.

    A non refundable fee charged on some mortgages to secure a particular mortgage deal and/or to cover administration costs.

    The fee charged for the administration involved in arranging the loan.

    The fee charged by a lender who, with the customer’s written consent, requests details from their existing mortgage lender.

    A Completion fee is a fee the lender charges to cover the cost of electronically transferring the mortgage funds to the borrower.

    Also referred to as a professional valuation, a Standard Valuation Fee is a fee to cover the basic valuation of a property conducted on behalf of a mortgage lender to enable them to assess the security offered by the property for the proposed mortgage.

    An exit fee is a fee charged by many institutions when you fully repay your mortgage. HSBC Bank do not charge an exit fee.

    Standard Valutation fee scale

    The current fee, including VAT (UK only), for HSBC Expat, Buy to Let property valuations is detailed below. Fees are subject to change, therefore, please refer to your Key Facts Illustration for details of the fees payable by you. The valuation fee quoted includes a 35 non-refundable administration fee. Please note this fee scale is not applicable to properties in the Channel Islands and Isle of Man. For such properties please refer to your local HSBC Bank plc, in the UK branch.