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In the past, homebuyers more or less had limited mortgage loan options. These days, there are more options than you can shake a stick at, but heres a primer on the basics.

Mortgage Loans

With the real estate market explosion over the last 10 years, a call has gone out for unique mortgage loan programs. Bankers have been more than happy to answer the call. For many borrowers, traditional mortgage loans still fit the bill. Heres an introduction.

1. Conforming Loans The loans comply with requirements set down by Fannie Mae and Freddie Mac, two government sponsored entities that buy and sell loans from mortgage lenders. These entities put strict caps on the loans they will buy, with single-family homes having a mortgage cap in the range of $360,000. With the booming real estate market, many areas such as San Diego do not come close to fitting into the conforming loan market since homes average in the $600,000 range.

2. Non-Conforming Loans Known as Jumbo Loans, these mortgages are written for loans that exceed the $360,000 cap mentioned previously. They tend to have slightly higher interest rates, but are readily available.

3. Bad Credit Loans In the mortgage industry, mortgage brokers often refer to a borrowers paper. This paper refers to people with less than stellar credit. B paper refers to relatively small problems, while D paper refers to bigger issues such as bankruptcy filings. The worse your paper, the more you can expect to pay in interest, points and down payment amounts. You need to carefully determine whether paying these extra penalties makes financial sense.

Interest Rates

With each of the above loans, youll have an option of going with a fixed interest rate or an adjustable rate. Fixed interest rates simply set a definitive interest rate that will be charged over the length of the loan. Adjustable rates typically start at a figure lower than fixed rates, but can be moved up to reflect changes in the cost of borrowing money. In many ways, you are betting whether interest rates will increase in the future.

For a great majority of people, basic mortgage loan options still suffice when it comes to borrowing money. Dont fret if you have problems qualifying for these loans. There are many other options on the market these days.

Online Mortgage Brokers – What You Might Not Know About Home Loans & The Internet

You may think that applying online for a mortgage is the same as applying with a broker in the ‘real world’, only more convenient.

While applying for a mortgage online is much more convenient, and sure to help you get a lower rate because of the amount of competition online, there is another benefit to using the internet when applying for a loan.

Sometimes when you meet a broker and he/she takes a look at your financial qualifications, they might say, we can get you this rate. And that’s it. That is your loan option with that broker. Most brokers have the mentality of wanting to process as many mortgage loans as quickly as possible, which is understandable. Well, one thing that you might want to know to help yourself out is that there are literally hundreds of different mortgage programs available. Most brokers and lenders will not explain to you the mortgage options you do have. They usually have a few favorite programs and will just use those over and over since they know them.

A great way to help yourself is to research loan programs online. One benefit of the interne is that there are many informative articles and information to help you understand the pro’s and cons of every kind of loan program, FHA loans, balloon mortgages, VA loans, graduated payment mortgages, Fannie Mae and Freddie Mac loans.

Once I started doing my research online and reading through the mortgage company websites online, I was amazed to discover that there are mortgage loans online that I would have liked to had when I first bought my house, but I didn’t even know they existed and they were never offered to me by my broker. I would have saved myself a lot of money had I done my research online first.

To view our list of recommended mortgage lenders online, visit this page: http://www.abcloanguide.com/mortgageloans.shtml.

Fannie Mae And Freddie Mac Mortgage Loans – Conforming Loans Provide Low Interest Rates

Conforming loans provide low interest rates since they are almost guaranteed to be purchased by Fannie Mae or Freddie Mac, which allows more funds to be available for borrowers. However, these corporations have terms, such as maximum loan, that limit how much you can borrow. If you dont meet their terms, you will need to apply for a non-conventional loan with slightly higher interest rates.

Loan Purchasers

Fannie Mae and Freddie Mac are stockholder owned companies that purchase mortgages, package them into securities, and then resells them to investors. This allows banks and other financing companies to lend to more customers since their capital is not tied up in long-term loans.

Fannie Mae and Freddie Mac have strict requirements for purchasing loans. Basically, they want to reduce their risk level so they put a cap on loan amounts, credit score, income level, and down payment.

Conforming Loan Amounts

Each year Fannie Mae and Freddie Mac create new guidelines for loan amounts. In 2005, a mortgage limit for a single-family dwelling is $359,650. Limits for multiple family dwelling are significantly higher, roughly an additional $100,000 per family. Maximum loan amounts are also 50% higher in Alaska, Guam, Hawaii, and the Virgin Islands since property prices are higher.

Second mortgages also have their limit. In 2005 the limit was $179,825, but the total mortgaged amount of both loans could not exceed $359,650. As with first mortgages, second mortgages can also be 50% higher in designated areas.

Non-Conforming Loans

There are other loan options if you dont qualify for a conforming loan. If you need to borrow more than the maximum conforming loan amount, then you will want to apply for a jumbo loan. Because these types of loans are handled on a smaller scale, their rates are slightly higher than a conforming loan.

If you have poor credit or little down payment, you can use a subprime lender who specialized in lending to B/C type loans. You can expect to pay higher rates with these lenders, but many offer favorable terms. To find the best deal and to avoid scams, you must research your lender. Compare rates and terms until you find a favorable financing package.