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Conventional Loans

 

CENTRAL FLORIDA CONVENTIONAL LOAN LIMIT: $424,100

What is a Conventional Mortgage Loan?

A type of mortgage in which the underlying terms and conditions meet the funding criteria of Fannie Mae and Freddie Mac. Fannie Mae and Freddie Mac guarantee or purchase 35-50% of all mortgages. 

The current Fannie Mae guideline for conventional home mortgage loan is at just over $424,100 for a single-family home in Central Florida and can vary in other areas.

Thirty-Year Fixed Rate Mortgage

The traditional 30-year fixed-rate mortgage has a constant interest rate and monthly payments that never change. This may be a good choice if you plan to stay in your home for seven years or longer. If you plan to move within seven years, then adjustable-rate loans are usually cheaper.  When interest rates are low, fixed-rate loans are generally not that much more expensive than adjustable-rate mortgages and may be a better deal in the long run, because you can lock in the rate for the life of your loan.

Fifteen-Year Fixed Rate Mortgage

This loan is fully amortized over a 15-year period and features constant monthly payments. It offers all the advantages of the 30-year loan, plus a lower interest rate—and you'll own your home twice as fast. The disadvantage is that, with a 15-year loan, you commit to a higher monthly payment. Many borrowers opt for a 30-year fixed-rate loan and voluntarily make larger payments that will pay off their loan in 15 years. This approach is often safer than committing to a higher monthly payment, since the difference in interest rates isn't that great.

Occupancy:

 
Principal Residence: A principal residence is a property that the borrower occupies as his or her primary residence.
 
Second Home: A second home is a property that is located within a reasonable distance from the borrower’s principal residence and which the borrower occupies for some portion of the year.
 
Investment Properties: An investment property is a property that the borrower owns but does not occupy.

 

Self-Employed Borrowers: We may verify a self-employed borrower’s employment and income by obtaining from the borrowers copies of his or her signed federal income tax returns (both individual returns and business returns) that were filed with the IRS for the past two years.
Lenders may use IRS- issued transcripts of the borrowers individual and business federal income tax returns that were filed with IRS for the most recent two years.
 
What is an ARM ?
 
With a fixed-rate mortgage, the interest rate stays the same during the life of the loan. But with an ARM, the interest rate changes periodically, usually in relation to an index, and payments may go up or down accordingly. 
 
The adjustment Period: Whit most ARMs, the interest rate and monthly payment change every year, every three years, or every five years.  However, some ARMs have more frequent interest and payments changes.
 
The Index: Most lenders tie ARM interest rate changes to an “index rate” If the index rate moves up, so does your mortgage rate in most circumstances, and you will probably have to make higher monthly payments. Among the most common Indexes are Treasury Bill, Cost of Fund Index and LIBOR.   You should ask what index will be used and how often it changes.
 
The Margin: To determine the interest rate on a ARM, lenders add to the index rate a few points called the “margin”. The amount of the margin can differ from one lender to another, but it is usually constant over the life of the loan.
 
Index + Margin = ARM Interest Rate.
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If you have any questions with regards to FHA loans, please call 407-839-6060 or Email: Mortgage@OrlandoFinancial.com

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Office:  (407) 839-6060
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