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A conventional loan is a mortgage that is not guaranteed or insured by any government agency, including the Federal Housing Administration (FHA), the Farmers Home Administration (FmHA), and the Department of Veterans Affairs (VA). It is typically fixed in its terms and rate.
Adjustable-Rate Mortgage (ARM)
Adjustable rate mortgages (ARMs) allow borrowers to pay lower interest rates on their loan for a set period, after which the rates change. The 7/1 ARM means that, for seven years, the borrower's interest rate will remain fixed. That's a clear advantage the 7/1 ARM has over other ARMs with shorter fixed-rate periods.
Federal Housing Authority Loans (FHA)
An FHA loan is a mortgage that is insured by the Federal Housing Administration. They are especially popular among first-time home buyers because they allow down payments of 3.5% for credit scores of 580+. However, borrowers must pay mortgage insurance premiums, which protects the lender if a borrower defaults.
HomeReady mortgages are a line of conventional home loans offered by Fannie Mae that are meant to help low- and moderate-income borrowers buy or refinance. HomeReady loans reduce the typical down payment and mortgage insurance requirements, but they're also more flexible about allowing contributions from other people.
Hard Money Loan (HML)
A hard money loan is a specific type of asset-based loan financing through which a borrower receives funds secured by real property. Hard money loans are typically issued by private investors or companies.
Veteran Affairs Loan (VA)
VA guaranteed loans are made by private lenders, such as banks, savings & loans, or mortgage companies to eligible veterans for the purchase of a home, which must be for their own personal occupancy. The guaranty means the lender is protected against loss if you or a later owner fails to repay the loan.
A personal or private mortgage is a loan made by an individual or a business that is not a traditional mortgage lender. As you evaluate the decision to use (or offer) a private mortgage, keep the big picture in mind.