Programs

H.L.F. Mortgage Services, Inc. offers several loan programs, some of which are described here. If you don't see the program you're looking for here, call us for more information.

Conventional loans

A conventional mortgage is a loan approved by a lender to the homebuyer, without government insurance or guarantees (unlike FHA loans). In today's market, you can finance up to 100% of the purchase price. Should you opt for less than a 20% down payment, private mortgage insurance (PMI) is required. This protects the lender for the amount of the loan in the event of a default. As the equity in your home increases, you may eventually be able to have the PMI payment removed.

Conventional loans may be conforming and non-conforming. Conforming loans -- also known as 'A' paper loans -- have terms and conditions that follow the guidelines set forth by Fannie Mae and Freddie Mac. These two stockholder-owned corporations purchase mortgage loans complying with the guidelines from mortgage lending institutions, packages the mortgages into securities and sell the securities to investors. This provides affordable funds for home financing that results in the availability of mortgage credit for qualified buyers.

Non-conforming loans include jumbo and B/C loans.

Jumbo loans

Jumbo loans are those which exceed the maximum loan amount set by Fannie Mae and Freddie Mac. Because they are less common than conforming loans, jumbo loans will often have a slightly higher interest rate than conforming loans.

B/C loans

Borrowers who do not meet the credit requirements for conforming loans may be able to get a 'B', 'C' or 'D' paper loan. B/C loans are offered to borrowers that may have recently filed for bankruptcy, foreclosure, or have had late payments on their credit reports. Their purpose is to offer temporary financing until the borrower can qualify for conforming "A" financing. The interest rates on these loans are higher, and the availability varies based on the borrower's financial situation and credit history. All loans that are not FHA, VA or RHS (Rural Housing Service) loans are conventional loans.

FHA loans

The Federal Housing Administration has a loan guarantee program which helps qualified borrowers to get a mortgage loan with a low down payment. The loan is obtained from a lender, but insured by the FHA. The most popular FHA loan has a minimum cash investment requirement of 3 percent. This money can come in the form of a gift -- it does not have to be your own money. The seller may pay a portion or all of the buyer's closing costs; a portion of the borrower's closing costs can be included in the amount of the mortgage loan. While an FHA loan will help you to buy a home with little money from your pocket, you must pay a mortgage insurance premium. In most 15- or 30-year FHA loans, the borrower pays 1.5 percent of the loan amount at closing (this amount is financed in the mortgage), along with a 0.5 percent annual renewal premium paid annually over the life of the loan. This premium cannot be canceled as the equity on your home increases.

VA loans

The Veterans Administration has a loan program available to current and former members of the United States Armed Forces who meet specific criteria. You must have a certificate of eligibility from the VA to apply for this loan type, as it indicates how much you are qualified to borrow. The maximum guaranteed loan amount is $240,000 -- however, if you require a higher limit, ask us for more information. The loan is obtained from a lender qualified to issue VA loans. The benefits of a VA loan include: no down payment and no private mortgage insurance. There is a one-time funding fee on these loans, which is paid to the VA. The fee can range from 1 1/4 percent to 3 percent of the loan amount.

Types

The programs listed above can be categorized into one of the two following types of loans:

Fixed-rate loans

The most popular home loan is the traditional fixed-rate mortgage. Generally this interest rate is a little higher than the initial rate you receive with a variable-rate mortgage. But what makes this loan so popular is that with a fixed-rate loan, you have the assurance that your interest rate will never rise. Also, your monthly payments of interest plus principal will always remain the same. If you are the kind of person who prefers the stability of knowing exactly how much you will pay each month, this could be the ideal loan for you.

Variable-rate loans

In recent years, the Adjustable-Rate Mortgage (or ARM) has become famous for its low initial interest rate. The primary advantage of this loan is that it permits you to qualify more easily for a loan, or to get a larger loan. Due to the fact that the variable-rate home loan is based on a published rate called an Index, your interest rate can rise or fall, meaning that your monthly payments can also increase or decrease. Variable-rate home loans can even save you money in the long run, if interest rates remain constant or fall.