Private mortgage insurance is required, on Conventional mortgage loans, when a borrower puts less than 20% down. This insurance protects the lender if a borrower defaults on their loan and pays the deficiency. The cost of the private mortgage premium is included in your monthly payment and is based on the amount of the down payment, the qualifying credit scores and other factors.
HUD (US Department of Housing and Urban Development) is committed to increasing home ownership for minorities and low-income Americans. It oversees the FHA (Federal Housing Commission, offering a variety of programs, including 203(K) loans to purchase a home that needs fixing up, financing for FHA-insured homes that have been acquired through foreclosure, and other FHA-insured loans. HUD has many programs to help in housing needs.
FHA loans (offered by the Federal Housing Commission) are the most popular. They don’t actually make the loan; they guarantee loans requiring only a 3.5% down payment, and they do not have as strict credit policies as many conventional loans.
VA (Veteran’s Administration) loans are really guarantees for loans obtained by certain qualified veterans or other qualifying home buyers or refinancers such as unmarried surviving spouses.
What is the difference between a fixed rate mortgage (FRM) and an adjustable rate mortgage (ARM)?
A fixed rate mortgage has a set interest rate for the life of the loan. An adjustable rate mortgage has a specified adjusting period where the rate can be adjusted along with the payment.