Offered Mortgages

Today in the mortgage industry there are many options for choosing your loan. These option change regularly because lenders are trying to maximize their profits by offering loans that work.

If the public shows no interest in a certain loan type they offer they will remove it and try to find one that the public wants. If the loan is able to be sold to individuals but it doesn’t have the ability to give the lending institution the return on their investment desire, they will discontinue it also. That being the state of the industry it is important that you try to get your funding through multiple lenders to insure you get the best deal for you.

Before we get to involved in this blog, I need to talk about the two main mortgage markets:

• The Primary Mortgage market is quite simply where the loan originated. This Is where the buyer and the lender come together. Many institutions supply funds to support this market. They include commercial banks, credit unions, saving and loans. This institution can hold the note and add it to their portfolio or they can sell it to the secondary mortgage market.
• The largest purchaser of residential mortgages in America is our government through Fanny Mae and Freddie Mac. These government sponsored Enterprises (GSEs) were created by acts of congress to promote activity in the secondary mortgage market.
• Ant time a loan is not insured or guaranteed by our government is called a Prime Conventional Mortgage Loan. Therefore, these are standard loans excluding those under the FHA (Federal housing Administration) and the VA (Veterans Affairs. Even though this type of loan preceded the governmental backed loans they have had to adapt to the demands of the public in order to compete in the marketplace. Typical these loans have a fixed rate. Back in 2005 over 84% of home loans were fixed rate, and 80% of these were conventional loans. Of this loan there are two types:
• The conforming which means it meets the requirements to be able to be sold in the secondary market. In order to do so these loans must use the standard GSE documentation.

Another type of loan that is sold is the Adjustable-Rate Mortgage loan. This loan was used improperly in the past and it has given the loan a bad reputation. It was the loan at fault it was the bowers lack of knowledge concerning these loans.  These loans are good when used according to their design. ARM loans usually come with a teaser rate which is lower than the rate offered to conventional loans.  After this teaser period is up many homeowners are able to use their time of purchasing the home through an ARM to be able to secure a conventional loan. Inflation is natural by desire and should be expected therefore one should not enter into an ARM loan thinking that they will not refinance in the future to a more suitable loan.

As a general contractor I might find a deal on a property and determine that I wish to purchase it to fix it up and resale it. To do so I have to crunch the numbers to determine the cash flow but it may be that I should take advantage of an ARM loan because I do not plan on keeping the property and the teaser rates will increase my cash-flow.

Any time a buyer does not own 20% equity in the purchased proper Private Mortgage Insurance is usually required. Once the owner hold 30% equity then they can request this cost be dropper  and if they forget the company must drop them within a year of their owning 20% equity in the property. When purchasing a property look for one you see an under develop potent in. By developing this you will increase the properties value and yours as well.

Note: Images on this blog site are from a free source or taken by the author. No image or group of photos is intended to represent the people the author serves. The author does not care about Race (that is a politically correct term that he does not like because we are all of the same Race, the Human Race. He prefers the term ethnicity), color, religion, sex, gender, marital status, disability, genetic information, national origin, source of income, Veteran or military status, ancestry, citizenship, primary language or immigration status. He is a service provider for all people. We will all rise together when we band together and help one another. Joseph Erwin is a Real Estate Broker, DRE # O2131799, and a CA general contractor # B 696662. He’s a member of the CRMLS and The East Valley Association of Realtors located in the Inland Empire region of Southern California.