Loan Programs

Loan Programs

Conventional Loans

Fixed Rate Mortgage Loans

The interest rate is fixed for the life of the loan, regardless of what rates do over the life of your loan. This ensures that your payment remains the same each month, which can make budgeting a lot easier. However, if your loan has an escrow account that is collecting for taxes or insurance, that likely will change over time and cause your payment amount to change annually. Conventional Fixed Rate Mortgage Loans are typically available in terms of 15, 20 and 30 years.

Adjustable Rate Mortgage Loans

The interest rate changes periodically by adding what’s referred to as a “margin” to an index specified in mortgage documents. These two numbers are combined to create the loan’s interest rate and often times have limits (sometimes referred to as “caps and collars”) that ensure the rate does not increase over a certain amount over the life of the loan. As an example, a 1-year ARM will adjust every year, typically on the anniversary date of the loan.

Because the rate changes as the index changes with fluctuations in the market, monthly payments on an adjustable rate mortgage loan likely will be different every year. However, if you are planning on being in your home a short period of time, an ARM may be a very good option with a lower interest rate.

Government Loans

FHA Mortgage Loans

Despite what many people think, the Federal Housing Administration (FHA) does not actually issue mortgage loans; it insures the loans for investors that purchased bond instruments secured by FHA home loans. Customers like FHA loans because they have more liberal qualification requirements.

In addition, they typically have a lower down payment requirement (as low as 3.5%), lower monthly insurance premiums and often have lower closing costs. This makes an FHA loan a very attractive loan for the first-time homebuyer and also for families with low and moderate income levels.

VA Mortgage Loans

Similar to FHA loans, VA loans are guaranteed by the U.S. Department of Veteran Affairs and lenders like Ruoff Home Mortgage make the loans to eligible veterans for the purchase, construction, or energy-saving improvement (approved by the lender and VA) of a home. VA loans share similar eligibility requirements as FHA loans, often with lower closing costs, and more liberal terms (usually without requiring a down payment) and even negotiable interest rates. If you qualify, the VA will issue a certificate of eligibility that you can provide a lender when making application for your loan.

USDA (Rural Development) Mortgage Loans

Under the Guaranteed Loan program, Rural Development guarantees loans made by private sector lenders. A loan guaranteed through RD means that, should the individual borrower default on the loan, RD will pay the private financier for the loan. The individual works with the private lender and makes his or her payments to that lender.

Under the terms of the program, an individual or family may borrow up to 102% of the appraised value of the home, which eliminates the need for a down payment. Since a common barrier to owning a home for many low-income families is the lack of funds to make a down payment, the availability of the loan guarantees from RD makes the reality of owning a home available to a much larger percentage of Americans.