Oscar Castillo
"Residential" Real Estate

Home Loans - various residential types available.                             

Oscar Castillo - your local BROKER- Realtor®

(858)775-1057         DRE# 01140298


 Information on various types of Residential Home Loans


 Before we get into the loan types availableAllow me to share a little bit of Home Loan information that I think you should know…Home buyers today have fewer mortgage options than people who bought during the housing boom (ie: bubble). Those were the days of  “creative” mortgages, when lenders were tailoring their home loan products to meet the needs of unqualified borrowers.  It was the start of subprime lending,  stated-income mortgages,  pay-option ARM (Adjustable Rate Mortgage) loans, and other risky loans.  What came next?.... well you guessed it- the housing CRASH!  Most all of those bad loans went "belly up", and so did most of the lenders who made them.  By now you know the rest of the story correct?  Just to make it clear, what followed was the foreclosure crisis, bank failures, bailouts, and thus the current recession etc.

As of today,  most of those risky mortgage loans are no longer available.  New restrictions have been placed on the lending industry/institutions. Needless to say, we have gone back to the basics.  This can be interpreted as both good news and bad news for home buyers:

• It's good news, because currently a potential buyer will not be nearly as confused when shopping for a mortgage loan. Back then (before the housing bubble) there were many different options to choose from.   Options are more simplified now. What this means is: there is less homework for you in regards to having to educate yourself about the many loan options that are out there.

• It's bad news because you may find it harder to qualify for a loan.  Currently the lending institutions have stricter guidelines to follow.  If you have a lot of debt, or a bad credit score, you might not be able to qualify.  Most of the "backdoor-creative" mortgage options are gone. What this means is:  Only the higher qualified borrower will more than likely get the home loan.

When choosing a type of mortgage loan today, it will basically comes down to two choices. (1) Do you want a fixed or adjustable-rate loan? (2) Do you want a Conventional or government-backed VA or FHA loan?  Once you answer these two questions, the rest of the process is pretty straightforward (ie: >Loan application,  >employment verification,  >debt analysis,  >credit score inquiry etc.)

As-you-know,  getting the right type of real estate home loan is an important part of the home buying process.  Therefore, I have put together, in a condensed form,  some basic information regarding the various types of residential real estate home loans that are common in the market today.   

80-10-10 Mortgage :  A mortgage transaction in which a first and second mortgage are simultaneously originated. The first position lien has an 80% loan-to-value ratio, the second position lien has a 10% loan-to-value ratio and the borrower makes a 10% down payment. 80-10-10 mortgage transactions are piggy-back mortgage transactions, and are frequently used by borrowers to avoid paying private mortgage insurance (PMI)

Fixed-Rate Mortgages  a mortgage  in which the interest rate  does not change  during the entire term of the loan. Most common is a 30-year loan.  The advantage to a fixed rate mortgage is that if you lock a relatively low rate, your payment won’t go up when rates do.

Adjustable-Rate Mortgages  With an adjustable rate mortgage, the rate of the loan can change throughout the term of the loan. The rate of the loan is based on adding points to a fixed base which the rate within itself is based according to a pre-selected index.

Interest only Fixed Rate - is a loan in which, for a set period, the borrower pays only the interest on the principal balance, with the principal balance staying unchanged. At the end of the “interest-only” term the borrower will have these choices.  You can pay the principal entirely, or with some lenders use the option to convert this loan to a principal and interest payment (or amortized) loan. The more typical terms are five- or ten-year interest-only period. After this time, the principal balance is amortized for the remaining term. In other words, if a borrower had a thirty-year mortgage loan and the first ten years were interest only, at the end of the first ten years, the principal balance would be amortized for the remaining period of twenty years. The practical result is that the early payments (in the interest-only period) are substantially lower than the later payments. This initially gave the borrower more flexibility because he is not forced to make payments towards principal.  Indeed, it also enables a borrower who expects to increase his salary substantially over the course of the loan to borrow more than he would have otherwise been able to afford.

FHA Home Loans  An FHA loan is a loan that is insured by the Federal Housing Administration. The basic FHA home loan program is also called the FHA 203(b).  They are intended to make housing more affordable especially for first time purchasers.  Interest rates on FHA loans are generally slightly higher than market rates, while down payment requirements are lower than conventional loans. Currently a buyer can get an FHA loan with as little as 3.5% down.  FHA loans can be created with the option of using either a fixed or an adjustable rate..  

Note and updateBorrowers who want to get a mortgage insured by the Federal Housing Administration (FHA) should act quickly to avoid changes the agency is making to "increase" its depleting insurance fund. This is the fund that purchases and insures your FHA home loan.  Effective April 01, 2013 - FHA will raise the annual Mortgage Insurance Premium (MIP) on most new loans.  On these FHA loans, the annual MIP will increase by 0.10 percentage point, or $100 per year for each $100,000 in loan amount.

For now,  FHA is not changing the “one-time premium” borrowers pay up front at loan implementation; it remains at 1.75 percent of the loan amount.

Another change in regards to the Mortgage Insurance Premium (MIP) is as of June 03, 2013:  FHA borrowers will have to continue paying annual mortgage insurance premiums for a longer period of time - in most cases for the life of the loan. If you have a 30-year loan, then it will be 30-years of MIP.

In the past, FHA automatically canceled mortgage insurance on most loans when a borrower had made enough payments to reduce the balance to 78 percent of the original loan amount.  If such was the case, the cancellation of MIP could have occurred anytime after 5-years.  Or if the home had increased in value 20% above the principal balance, then the homeowner was allowed to refinance thus getting rid of and/or cancelling the Mortgage Insurance Premium.

FHA - fixed rate - This is the most commonly used and most popular FHA program is the 203(b) loan.  It offers a low down payment, flexible qualifying guidelines and a maximum loan amount.  FHA fixed-rate loan often works well for first time home buyers because it allows individuals to finance up to 96.5 percent of their home loan which helps to keep down-payments and closing costs at low level minimums. The 203(b) home loan is also the only loan in which 100 percent of the closing costs can be a gift from a relative, non-profit, or government agency. Note: With a section 203(b) mortgage, you can make extra payments toward the principal when you make your regularly monthly payment. By making extra payments, you can repay the loan faster and save on interest. You can also pay off the entire balance of your FHA-insured mortgage at any time, with no penalty to you.

FHA 3.5% - Down payment - FHA mortgage guidelines are famous for their liberal approach to credit scores and down payments. The FHA will typically insure a home loan for borrowers with low credit scores so long as there's a reasonable explanation for the low FICO.   When it comes to FHA loans, the traditional, bare-minimum down payment amount is 3.5% of the contract sales price of the home.  The potential buyer can also have less-than-perfect credit. Borrowers who cannot afford a "traditional down payment of 20 percent" do indeed take advantage of this FHA 3.5% down to buy a home.  Another advantage of an FHA loan is that it can be "assumable", which means if you want to sell your home, the buyer can “assume” the loan you have. People who have low or bad credit, have undergone a bankruptcy or have been foreclosed upon may be able to still qualify for an FHA loan.  The FHA mortgage is somewhat of a misnomer because the FHA doesn't actually make loans. Rather, the FHA is an insurer of loans. The FHA publishes a series of standards for the loans it will insure. When a bank underwrites and funds a loan which meets the FHA specific guidelines, the FHA agrees to insure that loan against loss.  The FHA allows a down payment of just 3.5 percent in all U.S. markets, with the exception of a few FHA approved condos.
Other traits of an FHA loan include :
•Your down payment may consist entirely from "gift funds"
•Your credit score requirement is 500
•Mortgage insurance premiums are paid upfront at closing, and monthly thereafter.

FHA - Adjustable Rate Mortgage (ARM)  - The FHA ARM is a HUD mortgage specifically designed for low and moderate-income families who are trying to make homeownership a reality. Recent college graduates fall into this category.  This FHA program keeps initial interest rates and mortgage payments low and affordable for a stated and agreed upon period years such as 5-years etc.

FHA – Condominium Loans - FHA Condominium Loans are specifically geared toward those who purchase housing units in a condominium building. Condominium ownership, in which separate owners of individual units jointly own the development's common areas and facilities, is for some a very popular alternative to home ownership.  FHA Condominium Loans are designed to encourage lenders to extend affordable mortgage credit to those who have non-conventional forms of ownership. The Section 234(c) program insures a loan for 30 years to purchase a unit in a condominium building. The building must contain at least four dwelling units and can be comprised of detached and semi-detached units, row houses, walkups, or an elevator structure.

FHA 203K Loan - This program is described on the FHA/HUD official site as a home loan guaranty (insured loan) for the purpose of helping homebuyers and homeowners to finance both the purchase (or refinancing) of their existing home and the cost of its “rehabilitation” through a single mortgage or to finance the rehabilitation separately.  When buying a house that needs home improvements such as minor repairs, major repairs or updating,  consider this 203K Rehabilitation programSection 203(K) insured loans do save borrowers time and money.  They also protect the lender by allowing them to have the loan insured even before the condition and value of the property may offer adequate security/collateral.

FHA Energy Efficient Mortgage Loan – This program helps current or potential homeowners to significantly lower their monthly utility bills by enabling them to incorporate the cost of adding “energy efficient improvements” into their new home or existing housing. This FHA program eliminates the need for homeowners who are interested in making their home more energy efficient to take out an additional mortgage loan to cover the cost of the improvements they intend to make to their property. The program is available as part of a FHA insured home purchase or by refinancing your current mortgage loan.  It is our government's goal to make energy efficiency and conservation a way of life. The FHA Energy Efficient Mortgage Loan program contributes to these efforts by providing better housing and creating a way for homeowners to make valuable improvements to their homes at a relatively low cost.

FHA Graduated Payment Mortgage (GPM)  – is an FHA loan for homebuyers who currently have low to moderate incomes but expect them to increase substantially over the next 5 to 10 years. Recent college graduates fall into this category.  Through this FHA loan program, also referred to as Section 245, those who have limited incomes are able to purchase a home and make mortgage payments that will grow along with their earning potential. Those who are considering using a Graduated Payment Mortgage to purchase a home should keep in mind that while their monthly payments to principal and interest will start small, they will increase (based on a percentage) each year for up to ten years, depending upon the payment plan and schedule selected. These types of loans are also available in 15 and 30 year amortization periods.  Over a span of time, perhaps five to 15 years, the monthly payments will increase according to a fixed percentage each year.  The GPM works on the assumption that the buyer/borrower is aware that, due to the low initial payments, the buyer will have to make larger payments in the future. The initial payments do not cover all the interest of the loan.  The difference between what the buyer initially pays and the actual interest on the loan is called negative amortization. This difference amount is added to the loan balance.

Green Loans : This Green loan documentation type allows to expedite income documentation for self-employed borrowers or borrowers who have a source of income normally verified with tax returns. This is done In lieu of providing income documentation.  The borrower(s) simply signs the IRS Form 4506-T in order for lender to obtain a copy of the borrower’s tax return transcripts. Income will be calculated from the tax transcript.  One of the borrowers must be self-employed and/or have income which is normally verifiable with tax returns.

VA Loan  (Veterans Administration) - A mortgage loan made available to Veterans of the United States Armed Forces and current active military members which includes the benefit of a zero down payment.  A VA loan is issued by a traditional lender and  is backed, in part, by the US Department of Veterans Affairs. VA loans are one of the few sources for 100 percent financing of a home purchase. Again, Veterans can buy a home using VA funding without making a down payment.   The current 2019 VA zero down maximum Loan Amount is $690,000.   Conventional mortgages require the payment of private mortgage insurance--PMI--if the home buyer makes less than a 20 percent down payment.  The VA prohibits lenders from charging mortgage insurance (PMI) on VA loans. A VA loan offers the fixed rate as well as the adjustable rate.  The VA will allow a loan applicant to have some credit problems and still qualify for a mortgage. The VA looks at individual applicants and is willing to take special circumstances into account when approving a mortgage for a veteran.  VA loans cannot have prepayment penalties, and they are all assumable loans. Both of these features can make it easier to sell a home financed with a VA loan.

VA Interest Rate Reduction Refinance Loan (IRRRL) -  Also known as a VA Streamline Loan lowers your interest rate by refinancing your existing VA home loan. By obtaining a lower interest rate, your monthly mortgage payment should decrease. You can also refinance a VA adjustable rate mortgage (ARM) into a fixed rate mortgage.  No appraisal or credit underwriting package is required when applying for an IRRRL.  An IRRRL may be done with "no money out of pocket" by including all costs in the new loan or by making the new loan at an interest rate high enough to enable the lender to pay the costs,  when refinancing from an existing VA ARM loan to a fixed rate loan the interest rate may increase and lastly you may NOT receive any cash from the IRRRL loan proceeds.

Conventional - Conforming loan - Is a mortgage that is equal to or less than the dollar amount established by the conforming 2019 loan limit $690,000 in San Diego.  This is set by Fannie Mae and Freddie Mac's Federal regulator, the Office of Federal Housing Enterprise Oversight (OFHEO) and meets the funding criteria of Freddie Mac and Fannie Mae.  The term "conforming" is most often used when speaking specifically about a mortgage amount; however, the terms "conforming" and "conventional" are frequently used interchangeably.  Banks refer to mortgage loans that meet certain requirements, thus able to be sold in the secondary mortgage market, as conforming mortgages.  Banks usually sell these mortgages in order to free up money for them to make more loans.   Mortgages that exceed the conforming loan limit are classified as non-conforming or JUMBO mortgages

Non- Conforming Loan  - A nonconforming mortgage is any loan that does not meet Fannie Mae and Freddie Mac standards. Nonconforming loans are not eligible for sale on the secondary market, which makes them a less-preferable type of a loan for a mortgage lender to make.  Non-conforming loans (Jumbo) must be kept by the bank and not sold, or it can be sold to investors outside of the Fannie Mae or Freddie Mac companies.  It's easier to qualify for a nonconforming mortgage than a conforming loan. For example, for those wanting a “conforming loan”, housing expenses cannot exceed 28 percent of their monthly gross income. Their total debt cannot surpass 36 percent of monthly gross income. Nonconforming loans, on the other hand, can have borrowers who exceed these ratios.  Conforming loans also have maximum 2019 loan amounts $690,000, while nonconforming loans do not have limitations. This has earned nonconforming loans the name of JUMBO loans because nonconforming loans exceed the maximum loan amount permitted by Fannie Mae and Freddie Mac for conforming mortgages.  Credit restrictions are more lenient for nonconforming mortgage borrowers, as well. Borrowers with lower credit scores or blemishes on their credit reports may still be able to qualify for a nonconforming mortgage loan as a financing option for buying or refinancing a home.  Conventional loans typically have an 80 percent loan-to-value (LTV) ratio, which means the lender will loan only 80 percent of the purchase price or market value of the home, whichever of the two figures is lower. Nonconforming mortgage loans exceed the 80 percent limit, so nonconforming lenders may loan up to 100 percent of the purchase price or market value of the home.  Because non-conforming qualifying standards are looser and the risks are higher for the  lenders,  this in itself simplifies the understanding as to  why nonconforming/JUMBO mortgage loans typically have higher interest rates and fees associated with them.

Lender Paid Mortgage Insurance (LPMI) - is lender paid mortgage insurance and is normally available only on conventional loans. The idea of having lender paid mortgage insurance is relatively simple: pay a fee up front when you get your loan or accept a higher interest rate (most common) and the lender will pay for your mortgage insurance.  When a potential home buyer does the math, it is possible that getting LPMI on your loan could save you a chunk of money each month on your monthly mortgage payment. When it comes to the benefits of LPMI, most people first think of the lower monthly payment but that isn’t the only benefit of LPMI.  2-benefits are applicable here: (1) a benefit to LPMI is that you can actually qualify for more money since your monthly payment is less (2) since the buyer agrees to pay a higher annual interest rate, the homeowner has more interest to "write-off" at tax preparation time.

3% Down Payment - Fannie Mae (FNMA - Conventional Loan) and Freddie Mac (FHLMC-Conventional Loan) announced an option for qualified first-time homebuyers that will allow for a down payment as low as three percent (3%). the 97 percent loan-to-value ratio (LTV) option will expand access to credit for qualified first-time homebuyers that may not have the resources for a larger down payment.  These loans will require private mortgage insurance (PMI) or other risk sharing, as is required on purchase loans acquired by the company with greater than 80 percent LTV (less than 20% down).  The new 97 percent LTV offering is simply one way we are working to remove barriers for credit worthy borrowers to get a mortgage.  Homebuyers can purchase a home under Fannie Mae’s-Conventional Loan product with a three percent down payment if at least one co-borrower is a first-time buyer. The Conventional 97% LTV (3% down) basic qualification standards include :
•Loan size may not exceed $690,000, even if the home is in a high-cost market.
•The subject property must be a single-unit dwelling. No multi-unit homes are allowed.
•The mortgage must be a fixed rate mortgage. No ARMs via the Conventional 97% LTV  (3% down).

Jumbo Loans (non-conforming) - If you are seeking a mortgage loan that exceeds the 2019 limits that are set for conforming loans $690,000,  then you will go into the category of a  Jumbo Loan/mortgage. A Jumbo loan must be kept by the bank and not sold in the secondary market. But they can be sold to investors outside of the Fannie Mae or Freddie Mac companies.  Jumbo loans represent a larger risk to the banks, so the interest rates are usually higher, and the terms may not be as favorable, with higher down payments and other requirements.

Home Equity Loan - A consumer loan secured by a second mortgage, allowing home owners to borrow against their equity in the home. The equity is calculated and based on what equates to the difference between the homeowner's principal balance and the home's current market value. The home equity loan is a one time lump-sum loan, often with a fixed interest rate.  A home equity loan creates a lien against the borrower's house.  The mortgage also provides collateral for an asset-backed security issued by the lender.  Tax deductible interest payments may also be available to the borrower. Also known as "equity loan" or "second mortgage".   Home equity loans come in two types: (1) home equity term, which most often comes with a fixed interest rate, and (2) home equity line of credit (HELOC) which is tied to a variable rate.

Home Equity Line of Credit  (HELOC) - A line of credit extended (also known as revolving credit)  to a homeowner that uses the borrower's home as collateral.  Once a maximum HELOC loan balance is established, the homeowner may draw on the line of credit at his or her discretion.  Interest is charged on a predetermined variable rate, which is usually based on prevailing prime rates.  Once there is a balance owing on the loan,  the homeowner can choose the repayment schedule as long as minimum interest payments are made monthly.  The term of a HELOC can last anywhere from less than five to more than 20 years, at the end of which all balances must be paid in full.

Home Possible - Freddie Mac’s "Home Possible" Mortgage (Conventional alternative to FHA) is a great mortgage program designed for first time home buyers. What’s so special about this program? -  it allows a home buyer to qualify for dramatically reduced mortgage insurance premiums (MI) with a minimum 5% down payment.  The 5% down payment may be gifted by a family member. Borrower cannot own other property at closing, purchase must be for principle residence only.  Minimum FICO score = 620.  No reserves are required for a single family dwelling. Lastly, there is a "Household Income Limitations"  by County (San Diego is $72.3K , Orange County is $66.8K , Riverside is $62.6K)

Doctor Loan - Every year 16,000 new doctors graduate from medical school and about the same number graduate from residency.  These graduates have little money, but have vast sums of "future earnings" potential and it is a well known fact that most all of these future doctors will soon purchase a home.  Yet, by standard criteria, they had a difficult time securing a mortgage/loan therefore the creation of this so called "Doctor Loans".  Most of these doctor loans usually require little or no money down (0-5%) - Doesn’t require the borrower/doctor to have private mortgage insurance (PMI) attached to the loan - Some programs allow to use "gift" money for a down payment - and often these doctor loans do not calculate their student loans/debt toward the "potential income ratio". Basically if a graduate who has finished their residency and has a contract to start working can potentially buy a home.  The salary stated on the contract is what is used for the purposes of obtaining a home loan.

Debt Consolidation Loan - Debt consolidation is the process of combining and/or rolling all your unsecured debts (short term debt), such as credit cards,  into a single monthly home mortgage loan payment rather than dividing your payments within all your creditors. Most people who consolidate their debt usually do it to attain a lower interest rate, or the simplicity of a single loan.  You may be able to take out a debt consolidation loan using a home equity loan or a debt consolidation loan from a bank.  Consolidating with a home equity loan can be risky since your unsecured debt now becomes secured by your home.  If you can't afford the payments, you could lose your home through foreclosure. That wouldn't happen if your unpaid debts remained separated therefore continuing to pay your credit cards individually.  If you hire a debt consolidation company, your loans may not necessarily be consolidated with a loan.  Instead, your debts remain separate, but your payment is consolidated. You send one monthly payment to the debt consolidation company then that company divides your payment and sends it to all your creditors.  If you plan on hiring a debt consolidation company to make your payments, I highly recommend that you do your due diligence and investigate their business background and practices.

Refinancing Loan - To swap out your old loan with a more favorable loan. The new loan pays off the old loan, so you just make payments on the newer loan with presumably with a better rate and terms.   Sometimes a borrower will borrow a little extra during refinancing to take some equity out of an asset (also known as a “restructure” or "cash out" refinancing).  Refinancing can save you money every month or give you cash for financial needs, including home improvements or college expenses.  Refinancing a house works much the same as selling it, except that you are essentially selling the house to yourself. You apply for a new mortgage based on the value of your home, your income,  credit rating and the amount of equity you have in the home (ie: the difference between what the house is worth and what you owe on the original mortgage). The refinance mortgage goes to "closing" just like a regular mortgage; the original home loan gets paid off, and you are now bound by the terms of the new loan.  The most common type of refinancing is straight refinancing: You borrow only as much as you need to pay off the original mortgage, and save money going forward because of the lower payments. The alternative is cash-out refinancing, in which you borrow more than you owe on the original mortgage and take the difference in cash. The size of a cash-out refinance is limited by the appraised value of your home less the principle owed on old loan/mortgage.

Home Affordable Refinance Program (HARP) – Also known as the “Making Home Affordable plan”,  The original purpose was that HARP was supposed to help those financially struggling borrowers to refinance their home loan to a lower fixed interest rate.  Bottom line - The intent was to reduce the monthly payments plus with an added HARP objective of the borrowers being able to afford the new monthly payments and most importantly stay in their homes.  This program which was “rolled out” in 2009 was designed and directed at those who were financially strapped and possibly on the verge of missing a mortgage payment,  still in order to qualify for HARP they were to have had a solid payment history and were current in their mortgage payments.  But unfortunately the long and short of it is that almost all of these financially struggling homeowners were unable to refinance because their home values had decreased thus unable to refinance.  They found themselves in a spot where they owed more on their home than its market value (ie: known as Underwater or Upside Down).   How was a homeowner to take advantage of HARP?  According to the Federal Housing Finance Agency, the first step a borrower was to take is to see whether their mortgage  was owned by Fannie Mae or Freddie Mac. If so, borrowers should have been able to contact lenders that offered HARP refinances. This first HARP program (now known as HARP 1.0) fell way short of its goals.  So the government agencies made some changes and rolled out HARP 2.0 in December 2011 (see below)

 HARP 2.0  (Home Affordable Refinance Program) - The new “overhauled” HARP program came into existence with the intent of reaching out to even more underwater or upside down homeowners than the first HARP 1.0. The program’s goal is to allow homeowners to refinance their home loans even if they owe more than their homes are currently worth.  The expanded new HARP program is now referred as HARP 2.0 – this took effect back in December 01, 2011. The program is “expanded” in a sense that there been a change to accepting lower credit scores and as of late the Loan-to-Value (LTV) ratios are unlimited.  This HARP 2.0  program has been extended thru Dec. 31, 2015.

Again,  the basic requirements for HARP 2.0  is that Fannie Mae or Freddie Mac must have purchased, securitized or backed your home loan on or before May 31st, of 2009.  Your loan-to-value ratio originally needed to be higher than 80%, now the LTV's are unlimited.  For most homeowners who are underwater,  the LTV requirement should not be a problem.

In order to be eligible for the HARP refinance program :  (1)Your loan must be backed by Fannie Mae or Freddie Mac and  (2)Your current mortgage must have a securitization date prior to June 1, 2009.  If you meet these two criteria, you may be HARP 2.0 -eligible. However,  if your mortgage is an FHA, VA,  USDA or a Jumbo mortgage, you are not HARP-eligible.

Underwater FHA mortgages can be refinanced via the “FHA Streamline Refinance program”  and Underwater VA mortgages can be refinanced via the “VA IRRRL”  streamline mortgage program.  (known as: Interest Rate Reduction Refinance Loan).

What are the requirements to qualify for HARP 2.0?    You must meet all of the following requirements to be eligible to refinance under HARP.

• Your mortgage must be owned or guaranteed by either Freddie Mac or Fannie Mae (see below to find out if it is owned by either agency)

• You must have closed you current mortgage on or before May 31, 2009

• You cannot have refinanced under HARP previously unless you have a Fannie Mae loan that was refinanced under HARP from March-May, 2009;

• You must be current on your home loan;

• You cannot have made a late payment within the past six months;

• You cannot have made more than one late payment in the past 7-12 months;

• Your loan-to-value ratio (LTV) originally must have been greater than 80%.  Currently the LTV has changed and is now unlimited.

• Your loan must fall under the current “conforming loan” limits…..A conforming loan is one that falls at or below the maximum financeable amount allowed by the Federal Housing Finance Agency (FHFA).  The current 2019 San Diego HARP 2.0 conforming loan maximum amount financed is $690,000Note: Fannie Mae and Freddie Mac are restricted by law to purchasing single-family mortgages with origination balances above a specific amount, known as the “conforming loan limit.”  Loans above this limit are known as Jumbo loans.

What is Fannie Mae or Freddie Mac and what is the difference between the two?
There is very little difference between these two enterprises.  Fannie Mae and Freddie Mac are two separate Government Sponsored Enterprises (GSEs) that purchase and guarantee roughly half of all outstanding mortgages. In layman's terms, banks and lenders make the loans to borrowers and then turnaround and sell them to Fannie Mae or Freddie Mac. This is a very common practice and most banks do sell many of the loans they make to Fannie Mae or Freddie Mac. However, not all loans can be sold to Fannie Mae or Freddie Mac.  Loans that cannot be sold to these two government agencies are: … Federal Housing Administration (FHA), Veteran's Administration (VA), Jumbo mortgages or United States Department of Agriculture (USDA) loans.  Additionally, community banks and credit unions tend to sell loans to Freddie Mac and Fannie Mae less frequently than the national banks.

How do I know if Fannie Mae or Freddie Mac has my mortgageYou can check both Fannie Mae and Freddie Mac's websites (click the links provided for Fannie and Freddie) or call their toll-free phone numbers:

Fannie Mae:  Phone number: 1-800-7FANNIE (8 am to 8 pm ET)

Freddie MacPhone number: 1-800-FREDDIE (8 am to 8 pm ET)

*  A little explanation here about myself is that I am not a Home Lender nor am I in the Home Lending business.  I am a local San Diego REALTOR®, a Listing agent and Buyer agent.  My intent for the information mentioned above is for it to be useful to you. The purpose of this "Residential - Types of Loan" content is to have these various home loans described and explained to you in a manner so that it helps you to know a little more about and better understand what Loans Types are available.  For a full comprehensive and a more detailed explanation, I highly recommend you be consulted by a Home Mortgage Lender....Let me know if you need any lender referrals.

If you have any questions you can contact me anytime...  I can be reached rather easily.


Oscar Castillo


(858) 775-1057

DRE# 01140298


 email Oscar Castillo - Broker Associate REALTOR - San Diego, CA







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