The Many Faces Of Government Sponsored Loans
For many borrowers, securing a government sponsored loan for the purchase or refinance of a residence is reassuring, and makes a great deal of sense. Unfortunately many people aren’t aware of the many different types of government backed mortgage loans that are available. To that end, let’s take a look at some of the benefits of various government sponsored loans that you may find to be a good fit for you if you plan to purchase or refinance this year.
FHA Loans: These loans can require as little at 3.5% as a down payment. They are available for purchases and refinances (even if you have little to no equity in your home). FHA loans are available up to $729,750 and you don’t have to be a first time home buyer to qualify for this type of loan. The home needs to be your primary residence unless you cosign for a significant other or child and they are occupying the home as their primary residence.
VA Loans: As the name implies, these loans are designed for veterans, and offer some terrific benefits, including no down payment requirement, and you may even be able to have the seller pay your closing costs. You will be required to have your DD214, and you’ll want to check with the Veteran’s Association to determine your eligibility, or visit www.vba.va.gov, but you do not need to be a first time home buyer.
Fannie Mae/Freddie Mac: Two of the most popular government sponsored loans available, Fannie Mae and Freddie Mac offer loans for purchases, refinances and even cash-out refinances. They will require a minimum of a 5% down payment. Their conforming loan limits max out at $417,000. However, high balance conforming loans are available up to $729,750. These are the typical loans you see advertised in the newspaper most often. Most borrowers ate taking advantage of the low 30 and 15 year rates and you will typically save one-half percent for the 15 year loan.
Streamline Rehabilitation Program, aka Streamline 203(k): This government backed program is also a great option for homeowners and homebuyers. Its appeal to homebuyers lies in the fact that you can purchase a home that is damaged, and needs repair, with the loan including the amount of money needed for the repairs, up to an additional $35,000. A down payment for purchases can be as little as 3.5%. Similarly, if you already own a home that desperately needs repairs, a refinance may be available to you above the current value of the home, including the cost of home repairs and improvements.
CalSTRS: The California State Teachers Retirement System is available to employees of California Public Schools and Community Colleges. These 15-year and 30-year fixed purchase loans are offered through an exclusive program, and offer loans ranging from $417,000 to $834,000. Check www.calstrs.com for eligibity.
Refi-Plus: This government sponsored refinance loan is available to allow homeowners to refinance with little to no-equity in their home (up to 125% of the home’s value) if the loan was previously owned by Fannie Mae or Freddie Mac.
If you need more information on whether you qualify for a government sponsored loan, or have questions about whether any of these loans are right for you, contact a licensed, reputable mortgage professional.