FHA Loans: Great for 1st time homebuyer, FHA loans have a lower down payment requirement than conventional loans, but higher than VA loans. FHA has a more liberal qualifying formula than on conventional loans but not as liberal as VA loans. FHA loans made before December 15, 1989 are fully assumable and can be creatively financed. Loans made after December 15, 1989 can be assumed at the same interest rate with qualification. FHA is more lenient on properties that are older or are located in undesirable neighborhoods. Disadvantages - $155,250 county loan limits may be inadequate in high cost areas. Appraisals may contain more repair requirements than conventional loans.

• 3 % Down payment
• Offers a fixed rate/ARM
• Need no credit/little credit
• Mortgage insurance

Conventional Financing: A conventional loan is a mortgage loan, which is not insured or guaranteed by any agency of the state or federal government. Many years ago, the only loans available for housing were conventional loans with very short terms of 3-5 years with balloon payments and high down payment requirements of as much as 50% down.

• 5 % Down paymaent
• Must have good credit
• 2 months Reserv
• Down payment must be buyer own funds
• M.I 75%

Veterans Administration (VA): The VA loan program for owner-occupied housing is one of the best loan programs in the free world. It is possible for a veteran to obtain 100% loans up to $203,000 with absolutely no down payment and the seller or builder is allowed to pay all of the veteran closing costs, making the total cash required to purchase, in some instances, zero. If the veteran desires higher priced homes, he generally is required to make a down payment on the amount over $203,000. Generally, the Veterans Administration is a little more liberal than conventional lenders would be with regard to the veteran's credit standing and qualifying for the VA loan, although recent VA underwriting changes make the qualifying criteria similar to conventional mortgages.

5/1 ARM: The 5/1 ARM mortgage is a 5-year level payment program that guarantees the payments for the first 5 years and then it becomes a 1-year ARM for the remaining 25 years. The interest rate upon renewal is determined by an index out of the lender's control and may not be increased by more than 5% in interest. The prime advantage to the borrower is that the lender can offer a fixed rate level mortgage payment at interest rates .25% - .50% below 30 year fixed rate mortgages. This is because the lender is only locking in the interest rate for 5 years, rather than 30 years under the traditional 30-year fixed rate mortgage. The one disadvantage is the borrower may have to pay substantially higher interest rates and payments after the first 5 years, if interest rates go up over the first 5 years.

7 Year Balloon: The 7/23 mortgage is a 7-year level payment ARM that guarantees the payments for the first 7 years and then it becomes a fixed rate mortgage for the remaining 23 years. The interest rate upon renewal is determined by an index out of the lender's control and may not be increased by more than 6% payment at interest rates .25% - .50% below 30-year fixed rate mortgages. This is because the lender is only locking in the interest rates for 7 years, rather than 30 years under the traditional 30-year fixed rate mortgage. The one disadvantage is the borrower may have to pay substantially higher interest rates and payments after the first 7 years, if the interest rates go up over the first 7 years.

Jumbo Loans: Loans in excess of FNMA/FHLMC limits are called Jumbo loans and often carry higher interest rates and points. Larger down payments may also be required on these loans.

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McHenry - Lakemoor Office

VMF Mortgage Inc

328 Rand Road Rte 120, Lakemoor, IL 60051

Phone: 815- 759-3880
Fax: 815 344-1820

Elgin Office

VMF Mortgage Inc

721 N Dundee Ave. Elgin Il 60120 

Phone: 847-214-9119

Fax 847-2149124