Homeowners who are looking at a foreclosure can easily blame the economy for placing them in this problem. Foreclosures are rising these days because of layoffs, increased interest rates, declining property values, and other factors. But not all these people are facing this problem due to the recession. Some of them are just delinquent borrowers who continue living beyond what they can afford and do not think through the mortgages that they sign up for. President Obama’s housing bailout strategy is not a complete solution for this reason behind a foreclosure. Before you think of the paint color you want to use when you do home renovations, think of how much can really fit into your budget and which kind of mortgage to sign up for.
Government mortgage loans are also known as Federal Housing Administration or FHA loans. These loans are granted from the US Department of HUD. These loans generally allow more people to qualify versus the traditional loans. A benefit of this loan is that it does not have a high down payment that usually comes when you purchase property. Citizens of the United States can all apply.
Jumbo loans are those greater compared to the maximum set by conventional loans. Only a few borrowers can gain access to these and the interest rates are often a lot higher.
The RHS or Rural Housing Service works under the US Department of Agriculture. They guarantee the loans applied for by rural residents. These people are not expected to put up a down payment and the closing costs are also lower.
Fixed rate mortgages are opted for by others due to the fixed rate. So when they go for a shorter term, they pay up lower interest rates.
States also have local housing programs. The loans given are at a fixed rate and the down payments are lower along with the interest rate.
VA Loans are from the US Department of Veteran Affairs. These are given as benefits to people who join the army, navy, marine, and air force who also meet the qualifications of the loan. Again, it is easier to be approved for this particular loan than to be approved for a traditional one. The VA does not lend the money; it simply acts as a guarantor. There is a $203,000 limit for every loan.
Conventional loans are those obtained from Corporations. The maximum is higher than those granted by the government. A family can apply for as much as $417,000 but it might be harder to get approved for it.