ASSOCIATE
BROKERS - PRUDENTIAL CRANE
The following
information is deemed to be accurate at the time of
input; however, lender and government guidelines do
change from time to time. Always check for changes or
additional requirements with your lender. Do not rely on
this information as your sole source. It is intended to
give you general information.
CONVENTIONAL
FINANCING INFORMATION
GENERAL RULES
MAXIMUM LOAN: The maximum FNMA/FHLMC
loan amount for single family homes is $214,600.
Occasionally some lenders will exceed these loan amounts
depending on the availability of money to lend.
JUMBO LOANS:
Some lenders will exceed the FNMA/FHLMC maximum loan
limits with loans, often referred to as "jumbo
loans." These loans may be as high as $1,ooo,ooo,
and a larger down payment percentage may be required,
such as 30% down.
INTEREST RATES:
The interest rates for fixed rate conventional mortgages
are currently subject to change, and are generally
slightly higher than for other types of mortgages.
Occasionally a buyer may obtain a lower interest rate
than the rate being quoted if prepaid interest is paid in
cash, referred to as discount points. With adjustable
rate mortgages, the interest rates may vary according to
a predetermined index and are usually below conventional
fixed rate loans.
TYPE OF HOUSING:
One to four family unit dwellings, usually with the buyer
occupying one unit of the structure. however, duplexes,
tri-plexes and four-plexes may be financed for investors
with a 25%-30% down payment requirement. Properties with
more than four units are considered commercial structures
and are not eligible for residential conventional
mortgages.
PRIVATE MORTGAGE
INSURANCE: Private mortgage insurance, usually
abbreviated as P.M.I., is required on all loans with less
than 20% down payment.
95% LOANS:
1. Could be a Higher rate and fee
2. Monthly PMI=.79% of loan amt. divided by 12
3. Tougher Underwriting
4. Need Great Buyer and Great Property
90% LOANS:
1. Monthly PMI=.53% of loan amount divided by 12.
2. Normal Qualifying Ratios: 28% / 36%
3. Normal Underwriting
4. Most Common type of loan
80% LOANS
1. No PMI required.
75% +LOANS
1. Special treatment
a. Easier underwriting
b. Expanded ratios
c. More lenient credit underwriting
PREPAYMENT PENALTY
Most FNMA/FHLMC conventional loans have no prepayment
penalty. However, some lenders charge a prepayment
penalty if the loan is paid off sooner than the term of
the loan.
LOAN ASSUMPTIONS
A few conventional loans may be assumed at the same
interest rate as the original note. However, some lenders
reserve the right to increase interest rate when the loan
is assumed. Some lenders may negotiate an interest rate
higher than the original rate, but lower than the
prevailing rates for fixed rate mortgages. And some
lenders require the buyer to qualify on a conventional
loan assumption.
Most fixed rate conventional loans are not assumable.
Most ARM loans are assumable.
MULTI-FAMILY LOANS: Two to four unit
dwellings may be financed with FNMA/FHLMC conventional
loans. 90% loans may be available if the buyer is to
occupy one of the units. If the buyer is an investor, not
an owner occupant, 70% loans may be available. Commercial
loans would be needed for properties with more than
four units.
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