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Conventional Home Loans
In South Dakota and many states like Colorado, Wisconsin, Nebraska, Wyoming and North Dakota, loans come in two types – conforming and non-conforming. Frankly, this is the case nationwide. In order to fully understand the difference, you first must know a little bit about Fannie Mae and Freddie Mac.
Freddie Mac and Fannie Mae are the two government sponsored enterprises (GSEs) that provide liquidity in the mortgage market.
Technically speaking, a conventional loan is any mortgage that is not guaranteed or insured by the US government, such as VA, FHA and USDA.
Conventional mortgages include portfolio loans, construction loans, and even subprime loans. But again, whenever a lender refers to a “conventional loan” they are most likely referring to conforming mortgages that are eligible for purchase by Fannie Mae and Freddie Mac.
Property types include 1-4 unite properties, manufactured homes on their own land, condos, and town homes
In the United States, a conforming loan is a mortgage loan that conforms to GSE guidelines. In general, any loan which does not meet guidelines is a non-conforming loan. A loan which does not meet guidelines specifically because the loan amount exceeds the guideline limits is known as a jumbo loan.
Starting in 1970, Fannie Mae was authorized by the United States Government to purchase residential mortgage loans. Fannie Mae worked with Freddie Mac to develop uniform mortgage documents and national standards for what would come to be known as a conforming loan.
The Office of Federal Housing Enterprise Oversight (OFHEO) set the criteria on what constitutes a conforming loan limit that Fannie Mae and Freddie Mac can buy. Criteria include debt-to-income ratio limits and documentation requirements.
The maximum loan amount is set based on the October-to-October changes in median home price, above which a mortgage is considered a jumbo loan, and typically has higher rates associated with it. This is because both Fannie Mae and Freddie Mac only buy loans that are conforming, to repackage into the secondary market, making the demand for a non-conforming loan much less.
Learn How The Mortgage Process Works And The Types Of Loan We Offer You
Technically speaking, a conventional loan is any mortgage that is not guaranteed or insured by the US government, such as VA, FHA and USDA. Conventional mortgages include portfolio loans, construction loans, and even subprime loans. Property types include 1-4 unite properties, manufactured homes on their own land, condos, and town homes.
FHA loans typically offer options for first-time home buyers, senior citizens and home improvements. If you are a first-time home buyer, an FHA loan may allow you to make a down payment of 3.5% (ie. You don’t have to save up too much money for a down payment). Because FHA loans are insured, lenders can and do offer FHA loans at attractive interest rates and with more flexible qualification criteria. If you are interested in a home that requires some improvements, there is an FHA loan to address your needs.
VA Loans in South Dakota and Wyoming are made to fit the unique needs of Veterans, current military personnel, and in some cases, spouses of veterans or current military personnel. A VA Mortgage differs to some degree from a standard mortgage. While provided through Affiliated Mortgage, the loan is guaranteed in part by the Department of Veterans affairs. Those eligible for VA loans can have little or even no down payment. There are a few special considerations for a VA Loan: good credit and enough funds for payment are among them.
USDA Loans, commonly referred to as Rural Development loans provide borrows with a variety of attractive benefits if the subject property falls within the USDA RD Home Loan Footprint. USDA loans require no down payment and borrowers may finance up to 100% of the property value. While these loans are attractive, you must meet income restrictions for the county in which your new home is located. Each county has a maximum income requirement however the USDA Home Loan Program does allow for certain considerations. One of the final primary criteria’s is that the property be an owner occupied property, investment properties are not eligible.
a- Find with help of your real estate agent the best-fit house for your needs and upon your choice, decide the terms you want to negotiate into your purchase contract. These may include: price, closing cost, and closing date.
b- Execute a contract: all parties sign the final contract to set the purchase in motion.
c- Deliver a fully executed purchase agreement to your loan officer.
This is an optional step in which a home buyer can hire an independent inspector to view the home and make sure there aren’t any issues with the integrality of the home before fully committing to buy the house.
a- Your loan officer prepares your loan documents for signatures.
b- A full loan package is submitted for processing.
A licensed appraiser will conduct a review of your new home’s value, make sure that there is sufficient collateral to support the mortgage and that the house is in adequate condition for the loan
Affiliated mortgage’s processing team will double-check your documents and make sure your file is complete. At this time a conditional loan approval is issued.
a- The title company and Affiliated Mortgage will collect all the invoices for the services provided during the loan process.
b- The title company will coordinate a time to meet with the new home owner, your loan officer, and realtors to execute the final mortgage and pertaining documents.
c- The title company then takes the money funded by Affiliated Mortgage and pays out all outstanding balances. Then, the title company gives the homeowner a clear title to their new home.