CIFI

Conventional mortgages are home loans that are not insured or guaranteed by the federal government. They are typically offered by private lenders such as banks, credit unions, and mortgage companies. These loans adhere to the standards set by government-sponsored enterprises like Fannie Mae and Freddie Mac, which purchase mortgages from lenders to sell to investors in the secondary market. One key feature of a conventional mortgage is that it usually requires a down payment of at least 20% of the home's purchase price.

This is to avoid the need for private mortgage insurance (PMI), which is an additional monthly cost that protects the lender in case the borrower defaults on the loan. If a borrower puts down less than 20%, they will likely have to pay PMI until they have built up at least 20% equity in their home. Conventional mortgages come in two main varieties: fixed-rate and adjustable-rate. Fixed-rate mortgages have interest rates that remain the same throughout the life of the loan, making monthly payments predictable. Adjustable-rate mortgages (ARMs) have interest rates that can change periodically, which can result in fluctuating monthly payments. To qualify for a conventional mortgage, borrowers typically need a good credit score, a steady income, and a low debt-to-income ratio.

Lenders will also require borrowers to provide documentation to verify their income, employment, and assets. The specific requirements may vary depending on the lender and the borrower's financial situation. Overall, conventional mortgages offer a relatively straightforward path to homeownership for borrowers who meet the eligibility criteria. With a range of loan terms and interest rate options, they can be a suitable choice for many homebuyers.

Fannie Mae

Fannie Mae was created in 1938 by the Federal National Mortgage Association (FNMA) to buy mortgages from lenders, freeing up capital that could go to other borrowers during the Great Depression. Its primary mission was to purchase FHA-backed loans from banks, freeing up cash, so lenders were able to offer home loans to even more Americans.  Fannie Mae remained a government-owned entity for the first three decades of its existence, with a near monopoly over the secondary mortgage market. It was privatized in 1968, and Freddie Mac was created in 1970 as a competitor to dilute its monopolization of the market.

Freddie Mac

Freddie Mac, also known as the Federal Home Loan Mortgage Corporation (FHLMC), was created in 1970 as part of the Emergency Home Finance Act to expand the secondary mortgage market in the US. Prior to its creation, the Federal National Mortgage Association (Fannie Mae) was the only institution that bought real estate mortgages and home loans from issuers.  Freddie Mac is a publicly traded, government-sponsored enterprise that buys mortgages, pools them, and sells them as a mortgage-backed security (MBS) to private investors on the open market. It was originally created as a public enterprise and even had stock listed on the New York Stock Exchange. In 1989, under the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA), Freddie Mac underwent a reorganization.

Loans Above $726,200

In the United States, a jumbo mortgage is a mortgage loan that may have high credit quality but is in an amount above conventional conforming loan limits. This standard is set by the two government-sponsored enterprises, Fannie Mae and Freddie Mac, and sets the limit on the maximum value of any individual mortgage they will purchase from a lender.

When FNMA and FHLMC limits don't cover the full loan amount, the loan is referred to as a "jumbo mortgage". Traditionally, the interest rates on jumbo mortgages are higher than for conforming mortgages, however with GSE fees increasing, Jumbo loans have recently seen lower interest rates than conforming loans

Improvements and Renovations

Title: Fannie Mae's HomeStyle Renovation Loan. Fannie Mae's HomeStyle Renovation Loan is a popular financing option for homeowners looking to make significant improvements or repairs to their properties. In this post, we'll explore the key features and benefits of the HomeStyle Renovation Loan, as well as the eligibility requirements and the loan application process. The HomeStyle Renovation Loan is a single-close mortgage that allows homeowners to finance both the purchase and renovation of a property. This type of loan can be used for various projects, including energy-efficient upgrades, accessibility modifications, or even luxury additions. One major advantage of the HomeStyle Renovation Loan is its flexibility. Borrowers can choose to work with a contractor of their choice, and the loan can cover a wide range of renovation costs, including labor, materials, and permits. Additionally, HomeStyle Renovation Loans can be used for primary residences, second homes, and investment properties. To be eligible for a HomeStyle Renovation Loan, borrowers must meet certain credit and income requirements, and the property must pass an appraisal inspection. The loan-to-value (LTV) ratio is typically capped at 97%, and borrowers must have a minimum credit score of 620. The loan application process for a HomeStyle Renovation Loan is similar to that of a traditional mortgage. Borrowers will need to provide documentation such as income verification, tax returns, and credit reports. Once the loan is approved, the funds are disbursed in installments as the renovation progresses. In conclusion, the Fannie Mae HomeStyle Renovation Loan is a versatile and flexible financing option for homeowners looking to make significant improvements or repairs to their properties. By carefully evaluating the eligibility requirements and considering the benefits of this loan, you can determine whether it's the right choice for your home renovation project.

Loans For Seniors

The Truth About Reverse Mortgages: Understanding the Pros and Cons Reverse mortgages have been a popular financial tool for senior citizens in recent years, but they are often misunderstood and even maligned. In this post, we'll explore the concept of a reverse mortgage, its advantages and disadvantages, and whether it's the right choice for you or your loved ones. A reverse mortgage is a loan available to homeowners aged 62 and older, allowing them to convert a portion of their home equity into cash. Unlike traditional mortgages, a reverse mortgage requires no monthly mortgage payments. Instead, the loan is repaid when the borrower passes away, sells the home, or moves out permanently. One major advantage of a reverse mortgage is that it provides much-needed cash for seniors who may be struggling financially. This cash can be used for daily living expenses, home improvements, or even medical bills. Additionally, as long as the borrower continues to live in the home, they are not required to make monthly payments on the loan. However, there are also significant drawbacks to consider. Firstly, the loan balance typically grows over time, which may reduce the inheritance left to heirs. Additionally, the closing costs and fees associated with a reverse mortgage can be higher than those of a traditional mortgage. Another potential downside is the possibility of foreclosure if the borrower fails to maintain the property or falls behind on property taxes or insurance payments. In conclusion, reverse mortgages can be a valuable financial tool for seniors, but they are not without risks. It's essential to carefully weigh the pros and cons and consult with a financial advisor before making a decision. Ultimately, the right choice depends on your unique circumstances and financial goals.

Our Own Personalized Products

Portfolio Loans: An Alternative to Traditional Mortgages for Real Estate Investors In the world of real estate investing, securing financing can be a challenge, especially for those seeking more flexibility and control over their loans. Portfolio loans, or portfolio mortgages, are a type of financing that caters to real estate investors looking for alternatives to traditional mortgages. These loans are held and managed by the lender, rather than being sold on the secondary market, providing investors with unique benefits. Key Features of Portfolio Loans:
Flexibility: Portfolio loans offer a high degree of customization, allowing investors to tailor the loan terms to their specific needs. This includes adjustable interest rates, extended repayment periods, and the ability to finance multiple properties with a single loan.
Less stringent qualifications: Unlike traditional mortgages, portfolio loans may have more lenient qualifications, making it easier for real estate investors to secure financing. This can include a higher debt-to-income ratio, lower credit scores, and a higher loan-to-value ratio.
Interest-only payments: Some portfolio loans allow for interest-only payments during the initial years of the loan, providing investors with lower monthly payments and more cash flow to invest in additional properties or renovations.
Non-Warrantable Condominiums: Portfolio loans can be used to finance non-warrantable condominiums, which are not eligible for traditional mortgages. This can open up opportunities for investors in the condominium market.
Investment property financing: Portfolio loans are designed specifically for real estate investors, making it easier to secure financing for investment properties. This can include single-family rental properties, multi-family units, and commercial properties.
No private mortgage insurance (PMI): Since portfolio loans are not sold on the secondary market, there is no requirement for PMI, which can save investors money on their monthly payments.
Fewer restrictions on property usage: Portfolio loans may have fewer restrictions on how the property can be used, allowing investors to rent out the property on a short-term basis, such as through Airbnb or VRBO.
Potential for higher loan amounts: Portfolio loans may allow for higher loan amounts compared to traditional mortgages, giving investors the opportunity to finance larger projects or purchase more expensive properties.
In summary, portfolio loans offer real estate investors a flexible and customizable financing option that can help them achieve their investment goals. With fewer restrictions and more lenient qualifications, these loans can be an attractive alternative to traditional mortgages for those looking to expand their real estate portfolios.