Conventional (FNMA or Freddie Mac)
This mortgage is a contract between the lender and the borrower, at the lender’s risk. The borrower’s property is security; this means the lender can take the home for non-payment of the mortgage. This mortgage is not insured by a federally insured program, however it may be insured with a private mortgage insurance company. Conventional mortgages usually require larger down payments than FHA or VA loans, although zero down payment is now available with 700 plus credit scores. The maximum allowed loan amount changes often.

B/C (Alternate Financing)
These mortgages were developed to help borrowers who do not qualify for conventional loans. Recent late payments, a history of delinquent accounts, outstanding collections or judgements, a recent bankruptcy or foreclosure or a combination of these things may put a borrower into this loan category. Zero down payment programs are available; however, usually the credit score needs to be above 620.

VA (Veteran’s Administration)
This federal agency will guarantee the mortgages offered to qualified armed forces and active military personnel, veterans, and widows of veterans by private lenders. In most cases, one can buy a home on a VA loan with no down payment. The seller can pay all of the buyer’s closing costs, prepaid expenses and discount points.

FHA (Federal Housing Administration)
The FHA will insure the lender against loss in case the buyer cannot make the payments. It requires the buyer to carry mortgage insurance through the FHA. FHA loans are available with a relatively small down payment (2.25 – 3.00%). Generally a good program for first-time homebuyers who have little credit history, low credit scores, or no credit scores at all. Program allows borrower to use non-traditional forms of credit to prove credit worthiness. Gift finds are allowed for 100% of the buyers closing costs, prepaid expenses and down payment. Steve Betow (SB) does not offer this loan; however, we may at times refer clients to lenders who do. In some situations it may be the best for the client.

ARM (Adjustable Rate Mortgage)
The interest rate on an ARM may vary up or down at fixed intervals. The changes are tied to a financial index such as one-year Treasury notes. The ARM often offers a low beginning interest rate as a “teaser”, however this rate will usually go up after a specified period of time. If interest rates are high, an ARM may be a good option. This is particularly true if its cap (its maximum interest) is not more than a few points higher than the current fixed rate. ARMs are of special interest to buyers who know their income will rise in the future or who don’t plan to own the home for very long.

Fixed Rate Mortgage
The interest rate on this agreement stays the same for as long as you hold your mortgage, regardless of rate changes in the financial markets. With this type of mortgage, you know exactly how much you will pay in principal and interest on your home each month. Please note, taxes and insurance on a home may change from year to year.