Conforming Christian Mortgage Loans
Conforming Christian mortgage loans are contracts that are purchased by Fannie Mae and Freddie Mac from lenders. Fannie Mae and Freddie Mac convert them into securities and sell them to investors. These two private corporations have particular criteria in order to agree to a mortgage loan for an individual. One is a limit on indebtedness, which is currently at just over $300,000. But this limit changes annually. Individuals cannot obtain a contract that exceeds this limit. Eligibility is also determined by credit history, income, and employment status.
These contracts tend to be for people who plan to live in the same home for many years because conforming mortgage loans are typically given at a fixed rate for either 15 or 30 years. The fixed rate means that the homeowner will pay the same payment every month for the entire life of the loan. Those who move a lot will want to stick with a contract with a variable interest rate. The benefit for paying the higher payment through a conforming mortgage loan is to gain lower interest rates and a lower risk of foreclosure.
If a home buyer feels that a conforming mortgage loan is right for him, that person should sit down and calculate all of the costs. A borrower's credit report and score will be the basis for the terms. A wise consumer will first check out the credit score to become familiar with the terms in which to research the companies. The borrower may find that waiting and improving a credit score can be an advantage when looking for good terms. Another aspect to consider when researching contracts is determining the budget available for the contract. Some people are approved for contracts that are much lower than that person hoped. A buyer should check his debt-to-income ratio to find out if they are acceptable. Another qualification for conforming mortgage loans is that the borrower has held the same type of job for at least six months. These factors are especially important to lenders.
Some people opt to hire a mortgage broker. The mortgage broker knows and works with many lenders at once. They will know which lenders can offer the best deals. The broker will make sure that the buyer is eligible for the type of contract desired and will be able to tell buyers what types of loans and programs they qualify for and how much indebtedness they can get. If, in the end, they aren't eligible for the conforming mortgage loan they want, brokers can offer advice as to how to get it later. Purchasing a home is a major step for anyone. Take time to pray carefully, not just about the home itself but the lender, loan and broker. God tells us to "pray without ceasing," (1 Thessalonians 5:17). Take the time to work on your credit and pay off your debts. These are slow, but easy steps towards owning your own home.
Online mortgage loans are available to those that have computer Internet access and desire to secure financing for a home or property in which they do not have the cash on hand to buy. It can be approved 100% online, with signature forms being faxed to the appropriate department. Those that cannot get out of the house because of disability greatly benefit from online mortgage loan programs. They offer just as much security of confidential information through the use of encryption codes as on-location companies.
This type of financing can come in a variety of forms; a fixed interest rate, an ARM, an FHA or a VA. There are subcategories within each category mentioned that allow for detailed financing information and requirements. Fixed rate online mortgage loans allow an interest rate to remain constant, usually 30 years. Those that plan on owning their home for an extended period of time benefit greatly from the fixed rate online mortgage loan. Fixed rates give the homeowner security in knowing that their payments will never increase. Deciding how to finance a house is probably the biggest financial decision a person can make. It is important to have all the facts straight before signing anything and know what God says about finances. Pray that He lead the specific situation in a way that is pleasing to Him. It was never God's intention for money to control lives or become a burden. Use His gifts the best way possible.
ARM, or adjustable rate mortgages, allow for a fixed rate for a predetermined number of years, and then the interest fluctuates when that time expires to coincide with current market rates. There is a limit on how high and how low an ARM online mortgage loan rate can fluctuate (usually 2-3 percentage points), but there is a strong element of risk. The best candidates for ARM online mortgage loans are those that plan on selling the property within a predetermined number of years, or those that are making a home purchase when current fixed rates are abnormally high.
FHA financing is for first time home buyers that have limited down payment funds. Traditional financing typically requires a 10%-20% down payment. FHA online mortgage loans allow a small 3% down payment with the option to wrap the closing costs into the loan. This makes home ownership possible for low to moderate income families. The VA mortgage loan program allows a zero down payment and also carries the option of wrapping the closing costs in. VA financing is only available to veterans and their spouses. Both FHA and VA online mortgage loan programs have maximum purchase limits.
Non Conforming Christian Home LoanNon conforming home loans are those that exceed amounts allowed by Fannie Mae (Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Association). They are usually over the amount of $360,000. Fannie Mae and Freddie Mac are government sponsored organizations that help facilitate the availability of home loans by investing government funds throughout the country. These types of contracts are also referred to as "Jumbo" loans. They typically have a higher interest rate and different down payment requirements for the borrower. Amounts offered through this method can be granted to the amount of 2 million dollars.
There are a number of private investors that are looking to invest in a non conforming home loan, and mortgage brokerages that specialize in this area act as third party intermediaries between borrowers and the private investors. Unlike traditional lenders, non conforming home loan brokerages can approve a deal faster within their own organization. There is typically no red tape to crawl through because these financial deals are not government regulated. The brokerage has the liberty to approve or disapprove the terms, depending on standards given by their private investors.
When a borrower meets a private lender's qualifications, the brokerage may approve the terms and distribute the funds. Most non conforming home loans require considerable collateral or equity in the building being purchased. There is less personal documentation needed to qualify for these contracts. Some require no income verification and no down payments. Typically, investment properties and second homes qualify for non conforming home loan status. In addition to higher amounts, they are also offered to foreign nationals who would not otherwise qualify for a conventional contract in the United States. Jesus advises us, "For which of you, intending to build a tower, sitteth not down first, and counteth the cost, whether he have sufficient to finish it" (Luke 14:28). Qualifying for a good deal does not automatically mean a Christian should run out and sign on the dotted line. Because we are stewards of God, we must handle our finances in a way that pleases Him. Consult God first before entering into any kind of contract.
A borrower's credit score will directly determine the interest rate. Non conforming home loans already have higher interest rates, but the lower a borrower's credit score, the more the interest rate soars. The best method a borrower has of lowering those high interest rates is to improve his credit score. The fastest way to improve a credit score is to pay down credit card balances to at least 20 percent of their limits. This lowers the balance-to-credit-limit ratio and can raise a credit score up to 30 points in as little as 30 days. Raising the credit score before applying for any non conforming home loans is wise.
A home loan specialist can be an asset to anyone looking for a mortgage so they can buy a piece of property. Home loan specialists are just that, people who specialize in providing information about mortgages, or actually originate the mortgages themselves. They walk borrowers through the funding process all the way to closing. Unlike mortgage brokers, they are not freelancers in their field. These experts work for a particular lender and only assist borrowers in obtaining funding with their lender. Mortgage brokers work as independent contractors for multiple lenders. Before getting involved with an expert, consider all of the benefits and disadvantages. These experts work for particular lenders or banks so they have a vested interest in seeing the application processed as part of their job. Unfortunately, the borrower may end up working with an expert who was assigned, and not chosen.
After applying for the funding and the lender approves, an expert is basically assigned to the applicant by the lender. With a mortgage broker, the borrower has the freedom to choose. The borrower either calls on them for their services or not. Also, since home loan specialists only work for one lender, the homebuyer is limited to only the programs available through that particular bank, credit union, or brokerage. When seeking out a source for financing, ask friends and family who they would recommend. Friends and family may also offer helpful advice in working with the home loan specialist. The borrower can also sometimes find ads for professionals in local real estate magazines. Occasionally, homebuyers may work with an expert through the realtor selling the property they are interested in. Whether working with a mortgage broker or a lending expert, ask many questions. Many homebuyers just aren't qualified to find the best lenders or funding themselves.
Seek out God's wisdom when taking on the task of buying a property. Remember, God says "Counsel is mine, and sound wisdom: I am understanding; I have strength" (Proverbs 8:14) As a major plus, home loan Christian specialists can save homebuyers time by researching all of the possible mortgages that are offered. Some professionals also conveniently work as counselors by analyzing the homebuyer's financial situation, credit history, and future goals to determine the most appropriate type of loan for them. Experts will also explain specific requirements and restrictions associated with the lending process and answer questions the homebuyer has. As part of the job, a home loan specialist will look at the homebuyer's credit score to determine how much money can be borrowed, and will set up a repayment schedule for the balance with the homebuyer.