Many individuals looking to become a homeowner start with online searches. Searching for homes they might like and mortgage loan options they may qualify for. Here are 3 very different mortgage loan options that you can use to find a home of your choice.
Conventional Conforming Home Loan
This is the common situation where someone with a full time W-2 job shows up at a large bank and has a downpayment. They are looking for a 30 year amortization with the best interest rate based on their credit score and downpayment size. This could include FHA and VA loans with 0% up to conventional 20% down options.
This is the “Normal” home loan that a mortgage broker may offer up front at a traditional bank. This is often what is offered in many search results when first learning about home loans. However this is not the only way.
Mortgage brokers may offer different lenders or brokers to get a better rate compared to going to a specific bank. Yet, these are all still conventional/conforming home loans.
These are often the lowest cost/first option. They are often associated with Fannie Mae and Freddie Mac. This often comes with the most stringent requirements!
Fannie Mae: Created in 1938 by Congress as part of a campaign aimed at expanding the secondary U.S. mortgage market and increasing home ownership and rental housing.
Freddie Mac: Created in 1970 by Congress as part of a campaign aimed at expanding the secondary U.S. mortgage market and increasing home ownership and rental housing
Non-Conventional/Non-Conforming Portfolio Home Loan
These are less stringent home loans often offered by local credit unions or local banks. These credit unions still follow some national rules regarding lending, but they are lending their own money, which makes a big difference. When lending their own money, different rules apply that are often much more favorable to you.
This portfolio style loan is lending their own money and can do so at their own risk. They may have a wider range of options for people with different credit or incomes.
These loans are much more limited and sometimes require a relationship with that bank or credit union so they can understand your situation.
These loans are less common, but can be a great answer for your situation. These types of loans also include loans from family, friends, or close connections.
These private loans are often paying the whole amount and buying the home outright. You then owe them on whatever agreement you make.
This is a far less regulated loan type and may have more varying restrictions. This can also be great for a variety of different reasons. For example, this might work great for someone who has a successful small business, but can’t show three years of positive income through tax returns. This might also be for someone in a bad family situation who has a lot of assets and income, but very poor credit scores.
There are numerous people that this type of loan works perfect for.
Don’t know anybody? This is the space Home Equity Partner works in.
Home Equity Partner has a lease option or contract for deed that bridges a gap to becoming a homeowner. You can look at traditional home loans after a set amount of time. This is a creative solution for your situation.
To be clear, Home Equity Partner always recommends Conventional Conforming and Non-Conventional/Non-Conforming Home Loan loan options first. If these don’t work and you don’t know anyone personally, then reach out to us.
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“Your mortgage shouldn’t have been treated as a wager – it should be a way to provide a home and financial stability for you and your family.” – Lisa Madigan