5th Nov 2009 by Burt Carlson
There are three basic types of loans; conventional, government and jumbo. Conventional is the standard full doc loan with a maximum loan amount of $417,000 (more in areas defined as High cost). Government loans are FHA and VA (the Rural loan is also considered in this category). FHA loan limits are based on county (for example, in Maricopa County where Phoenix is located the maximum loan is $346,250). VA loans have the same limit as conventional which is $417,000. Jumbo loans are essentially any loan greater than $417,000.
Conventional rates today are around 5.00%, FHA/VA are about 5.00% and jumbo loans are from low 6.00% and less depending upon credit score and how much the down payment is. Most jumbo loans require at least 25% down. To keep the monthly payments down there are jumbol oans with interest only. These loans are typically fixed for 5, 7 or maybe 10 years. Rates run from high 4.00% to mid 5.00% range depending again upon credit score, down payment and how long the fixed period is (for example, a 5 year Arm at interest only will have a lower rate than a 10 year interest only).
Rates also differ from one region of the country and there are a variety of ways to price a loan. You should always check for Origination (commonly 1% of the loan amount), Discount (frequently used to buy down the rate-essentially you are paying for lower than market rate) and shop around! Also, a reputable lender will be willing to provide you with a Good Faith Estimate (GFE) so get one from each lender you contact. Finally, the length of the rate lock period can influence the rate (a 30 day rate will be lower than 45 day rate).
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