Business Loan
What is a conventional loan?
A conventional mortgage loan is not insured by government programs and either has a fixed or adjustable interest rate.
Typical fixed interest rate loans are 15 or 30 years of term. Loan with a shorter term will have a lower interest
rate. The loans are backed and guaranteed by captive finance companies, wholly owned subsidiary.
What is FHA loan?
FHA, commonly known as Federal Housing Administration, provides mortgage insurance on loans made by FHA-approved lenders
since 1934. The government does not actually lend the money to the borrowers. However, it does insure the mortgages.
Nonetheless, if the borrower can't repay the loan, the insurance reimburses the lender. This allows captive
lenders to offer loans to affluent applicants who might otherwise be denied. These loans are insured and backed by
the government. Conforming conventional loans follows the guidelines set by Fannie Mae and Freddie Mac.
Non-conforming loans which do not meet the guidelines are considered conventional loans. Captive finance
companies are a common place for qualifying FHA loans.
What is SBA loan?
SBA, a Small Business Administration, that is governed by state or local economic development agencies as well as
numerous nonprofit organizations provide low interest loans to small business owners who may not qualify for
conventional business loans. To apply, one must complete and submit business plan checklist.
What is VA loan?
VA loans are commonly insured by Veterans Affairs. The home must be for personal occupancy. One must qualify for the
Certificate of Eligibility (COE) program prior to submitting a loan application. A spouse of a Veteran can also
apply for a home loan eligibility as long as they meet the conforming guidelines.
What is a Jumbo loan?
A Jumbo loan is another way to buy a luxury home in a classy neighborhood. If the debt-to-income ratio is low and the
credit score FICO is a high and reasonable amount for down payment, then the Jumbo loan may be the answer for a homeowner.
The maximum loan amount for all states cannot exceed over $417,001 except for Hawaii and Alaska where it is $625,500.
What is USDA loan?
The acronym USDA in known as the United States Department of Agriculture, and it is intended for the soul purpose of
the rural area development. The program approves (guarantees) 90% of the loan to the lenders in order to reduce the risk of
extending 100% of loans to eligible rural home buyers. This program allows the lender to work with
moderate to low income families living in a rural area making homeownership a reality.
There is two Federal laws governing residential real estate sales and mortgage companies in America. The truth and lending act, known as TILA, provides required information to lenders that they must provide to consumers when they shop around for a mortgage. The statue of real estate settlement procedure act, known as RESPA, requires disclosure by a lender to all parties involved in a home transaction for accurate closing cost figures. These two laws confused consumers and generated frustration to lenders.
The Dodd-Frank Wall Street Reform and Consumer Protection Act (cfpb Consumer Financial Protection Bureau) brought TILA and RESPA together to simplify closing forms. What does this mean to consumers? The nominal closing timeline consumers were use to went away, and the Good Faith Estimate and Settlement Statement, known as HUD-1, were replaced with a loan estimate and a Closing Disclosure, respectively CD, that took effect on October 3, 2015.
Now there are more constraint requirements for lenders and an increased waiting time for consumers during closing. Within three days of closing, lenders are required by law to provide accurate CD to all parties, the cost of transaction. If any significant change took place during walk-through, the changes must be reported and a revised CD is distributed to all parties involved in the transaction. If the loan amount changed, then three days are added to the closing.
The above information is based on the Dallas, Texas market. To obtain local mortgage rates and minimum loan requirement qualifications, search for a qualified local mortgage lender in your neighborhood.
