Page 11 - Montana Cascade Buyer's Guide

Securing Financing - COMMON TYPES OF LOANS

Contacting your bank early in the home buying process can benefit you not only by helping you determine
how much home you can afford, but by providing you with pre-approval confirmation. This confirmation
proves to sellers that you are financially qualified to purchase the home, and it can be an influencing factor
in negotiations. When it comes to actually securing financing for your home, your banker can assist you
in determining a loan type that best fits your financial situation. A loan type will influence interest rates,
payoff rates, the loan period, etc.

CONVENTIONAL LOAN SECOND MORTGAGE

A conventional mortgage is offered by a bank and is A mortgage on real estate which has already been pledged as
not insured by the federal government. This mortgage collateral for an earlier mortgage. The second mortgage carries
requires a higher down payment and a lower debt to rights which are subordinate to those of the first.
income ratio. A conventional mortgage could have a
fixed or a variable interest rate. ADJUSTABLE RATE LOAN

FHA LOAN Adjustable or variable rate refers to the fluctuating interest rate
you’ll pay over the life of the loan.The rate is adjusted periodically
A mortgage issued by federally qualified lenders, to coincide with the changes in the index on which the rate is
which is insured by the Federal Housing Administration based. The minimum and maximum amounts of adjustment,
(FHA). FHA loans allow the borrower to borrow up as well as the frequency of adjustment are specified in the loan
to 96.5% of the value of the home. The 3.5% down terms. An adjustable rate mortgage may allow you to qualify
payment requirements can come from a gift or a grant, for a higher loan amount but maximums, caps and time frames
which makes FHA loans popular with first-time buyers. should be considered before deciding on this type of loan.

VA LOAN JUMBO LOAN

A VA Loan is a mortgage loan in the US that is A mortgage loan program for $417,001 or more in the continental
guaranteed by the US Dept. of Veterans Affairs (VA). United States. These limits are set by the Federal National
The loan may be issued by qualified lenders and was Mortgage Association and the Federal Home Loan Mortgage
designed to offer long-term financing to eligible Corporation. Because Jumbo Loans cannot be funded by these
American veterans. two agencies, they usually carry a higher interest rate.

MONTANA USDA LOAN

A USDA Mortgage provides a low-cost insured home
mortgage loan that requires no down payment and
can allow for the closing costs to be included in the
loan amount. (adequate appraisal value) There are
currently two kinds of USDA Home Loans available in
Montana for single family households. Please contact a
local lender for more information.

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