LOAN PROGRAMS

Conventional Loans – A mortgage that is not insured or guaranteed by the government, as opposed to a government mortgage. Typically insured through Private Mortgage Insurance (PMI), if the loan amount exceeds 80% of the property value.

Government Loans – A mortgage which is insured by the Federal Housing Administration (FHA), or guaranteed by the Department of Veterans’ Affairs or the Rural Housing Service.

FHA – Federal Housing Administration is government agency whose primary purpose is to insure residential mortgage loans. FHA loans have been particularly helpful for individuals who typically otherwise would not have been able to secure a loan from another source, due to low income, lack of large down-payment or higher credit risk.

VA – This is a mortgage that is offered to U.S. veterans who have served in the military by the Veterans Administration (VA). Typically VA mortgages require a smaller down payment and have more attractive interest rates than conventional, commercially available mortgages.

RURAL HOUSING – A Rural Housing or USDA Guaranteed Loan is Government insured 100% purchase loan. These Loans are only offered in rural area’s and serviced by direct lenders that meet federal guideline’s.

MSHA – Maine State Housing Authority provides low fixed rate mortgages and other assistance to help make homeownership affordable for Maine residents. No point and low point options are available. There are options with little or no down payment required. Help is also available with the cash needed for closing with down payment and closing cost assistance. MaineHousing mortgages even come with payment protection for unemployment.

LOAN TYPES

Fixed Rate Mortgage

A mortgage in which the interest rate does not change during the entire term of the loan. They are typically available in 30, 25, 20, 15 & 10 year term loans. Each month’s payment is equal to the interest on the principal and a bit of the principal. Since a bit of the principal is paid off, then the interest payment on the remaining principal will be a little less each month. Your payment is the same, so a little more of the principal is paid off each month.

Adjustable Rate Mortgage (ARM)

This is a mortgage with an interest rate that may change, usually in response to changes in the Treasury Bill rate or the prime rate. The purpose of the interest rate adjustment is primarily to bring the interest rate on the mortgage in line with market rates. The mortgage holder is protected by a maximum interest rate (called a ceiling), which might be reset annually. ARMs usually start with better rates than fixed rate mortgages, in order to compensate the borrower for the additional risk that future interest rate fluctuations will create.

FHA Rehab Loans

FHA offers the 203(k) program. It is the Department’s primary program for the rehabilitation and repair of single family properties. Borrower can get just one mortgage loan, at a long-term fixed (or adjustable) rate, to finance both the acquisition and the rehabilitation of the property. To provide funds for the rehabilitation, the mortgage amount is based on the projected value of the property with the work completed, taking into account the cost of the work.

Reverse Mortgages

If you own your own home and are at least 62 years of age, a reverse mortgage provides an opportunity to convert your home equity into cash. In the most basic terms, the reverse mortgage allows you to take out a loan against the equity in your home, but you don’t have to repay the loan during your lifetime as long as you are living in the home and have not sold it. If you want to increase the amount of money available to fund your retirement, but don’t like the idea of making payments on a loan, a reverse mortgage is an option worth considering. They are also called a reverse-annuity mortgage or a home equity conversion mortgage.