Loans Answers

Types of Mortgage loans??

Question: I am sure this has been asked before, but I am new to this newsgroup. If anyone has this info please e-mail me or post to the group.

Question:

Can someone explain the different types of loans to me and who may apply for the loan?

FHA, MHFA, MCC, VA, MCAD and any others you can think of. Also explain the abbreviations of the loans.

Also, What is meant by “creative financing”? A

Answer: Federal Housing Authority. Federal program which allows house purchases under very favorable conditions to buyer, with such low dp’s as 3% of purchase price.

I understand the paperwork is a bear, and that FHA can be very picky about the condition of the property — no peeling paint on the exterior allowed, for example. My Mom, a loan broker, recommended that if we could do without the FHA program, that we do so, since many lenders find them hard to do, and very bureaucratic (and so will not try real hard to close the loan). What state are you in? CA has the Calif Housing Finance Agency (CHFA), so I’d imagine that it’s your state agency. The CHFA loans typically allow below market-rate 30-year fixed loans to lower income buyers. Mortgage Credit Certificate. We have one. :^) The basics: instead of the standard 100% deduction for the mortgage interest paid at the end of the tax year, the buyer is allowed an 80% deduction, and a 20% credit (a dollar-for-dollar *credit* against the bottom line of taxes owed). *Very* advantageous! The other benefits are that you can increase the standard loan ratios, can adjust your W-4 withholding allowances to give you additional income and less taxes paid upfront (since you’ll be paying less tax at the end of the year), and the additional income from the increased withholding is figured into your take-home pay for loan qualification.

In order to qualify, you cannot make more than the median income amount for your county, and the purchase price of the house has a cap set on it according to local median as well.

In CA (Alameda County) the application fee was $300, and the forms need to be notarized. Money is allocated on a fiscal year basis, and if you apply too late in the year, all the allocations may be gone.

This is a federal program, and was recently renewed on a permanent funded basis in Clinton’s 1993 tax/budget bill.

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