There are a few things to understand when you are considering mortgage types. One of the most important is a fixed rate versus adjustable rate mortgage.

Fixed Rate Mortgage means that the interest rate for the full term of the mortgage is locked and cannot change. This principal and interest portion of the loan will remain the same during the repayment of your mortgage over the life of the loan. Although your monthly escrow payment may fluctuate based on increases in taxes and insurance, the monthly payment associated with the repayment of the outstanding mortgage balance remains fixed.

Adjustable Rate Mortgage (ARM) traditionally has a lower interest rate at the beginning of the mortgage which changes over time based on an index. There are many types of adjustable rate mortgages and the terms of the payment change are based on the specifics of the adjustable rate mortgage product you select. ARMs have a low and high limit on how much your payment can change over a period of time and the term of your loan. The perception is that over an extended period of time ARM loans will have lower interest expenses than fixed rate loans. To get this benefit, you must be willing to live with both changes up and down in your interest rate and your payment. If you’re comfortable with this uncertainty, then there is a good chance that you can save on your interest expense. ARMs have always attracted buyers who expect to be in the house for only a few years. For example, the interest rate on a 5/1 ARM is set for the first five years and is then adjusted annually thereafter. If you know you are going to stay in the home for no longer than five years, reaping the benefits of the low rate the first five years makes sense.

Another consideration in finding the right mortgage for you is a conventional loan versus a government loan. This distinction regarding mortgages refers to the insurance or guaranty of your loan.

Conventional loans are not insured or guaranteed by the federal government; they most likely have no insurance or are traditionally insured by private mortgage insurance companies. Conventional Loans are probably the most popular loan of all loans and are used to purchase or refinance single family houses. Minimum down payments are generally 5% and loans with 20% down payments don’t require the additional expense for mortgage insurance. They usually adhere to Fannie Mae/Freddie Mac approval guidelines.

Government loans are insured by departments within the US government like the Federal Housing Administration (FHA) or the Department of Veterans Affairs (VA). Government Loans offers lower down payment options for homebuyers with competitive mortgage rates.

Qualifying for a FHA loan is easier than any other loan. FHA Mortgages help low- and moderate-income homebuyers purchase homes with low down payments and flexible qualifying guidelines. These loans are insured by the Federal Housing Administration (FHA), which sets maximum loan limits that vary by area. With an FHA mortgage, you can use a gift or unsecured loan for down payment and closing costs. FHA mortgages are available in fixed rate and adjustable rate mortgage options. This loan type can help you afford a bigger home with the least amount of cash compared to other loan programs. Please call us for the loan limits in your county or visit the FHA website. McCue Mortgage has been a FHA approved lender for over 45 years.

VA Mortgages are home loans that are guaranteed by the Department of Veterans Affairs (VA) and are a no down payment loan that is ideal for veterans or active duty members of the U.S. Armed Forces with the requisite remaining eligibility. If you’ve been in the military, be sure to explore this opportunity.

CHFA Mortgages are unique to Connecticut. If you intend to buy your first home in Connecticut, you should consider the CHFA program made available through the Connecticut Housing Finance Authority (CHFA). Borrowers benefit from low interest rates, an easy lending process and low down payments. This program offers homeownership opportunities to those who might not benefit from conventional lending programs. Qualified borrowers must fit CHFA’s criteria in order to participate in the program, including loan and income limits.

There are many special options under the CHFA mortgage program that may make buying your first home affordable:

• Lending in federally targeted areas
• Down payment assistance
• Military, police and teacher programs
• Property rehabilitation options under the FHA 203K program
• Section 8 Housing Choice
• Urban rehabilitation homeownership mortgage program

McCue Mortgage is the #1 CHFA lender in the state! If you are looking to buy your first home, check out this great opportunity.

Jumbo Mortgages are loans that are over a certain dollar value set by Fannie Mae and Freddie Mac. This dollar value, known as the “conforming loan limit”, helps to define the loan sizes that these two government sponsored enterprises will guaranty in an effort to bring liquidity to the mortgage market. Jumbo loans are traditionally used to purchase “luxury homes” because the dollar value set by Fannie Mae and Freddie Mac is higher than most average home prices in the area. Due to the larger loan amount, there are usually higher interest rates associated with jumbo mortgages.

Rehabilitation Mortgages are loans to purchase and improve a property. These programs allow homebuyers access to cash to pay for upgrades, improvements and/or property repairs. McCue Mortgage offers two rehabilitation loans in conjunction with CHFA to buy and unlock the potential of a property to meet your needs:

• FHA 203K
• Urban rehabilitation homeownership mortgage program

Improvements to the property can help you customize your home with improvements like the installation of an additional bath; remodeled kitchen with new appliances; roof, gutter and downspout; floor, tiling and carpeting…and so much more. Rehabilitation loans are a more complicated mortgage type and require some additional consideration for the value of the repairs and improvements prior to approval. If you are considering this loan type, be sure to discuss your options in detail with one of our licensed loan originators.

HERO is a mortgage program designed to support neighborhood stabilization by providing CHFA financing to homebuyers that are purchasing forclosed, abandoned or bank-owned properties in Connecticut. McCue Mortgage is one of the few lenders in the state qualified to offer the HERO program as an option. Being the state’s leader in CHFA loans, McCue Mortgage is already familiar with the process and can get you in your home quickly.

Requirements are very similar to CHFA guidelines with few variations that may work in the favor of our customers…

NO income limits for the borrower, unless utilizing the Downpayment Assitance Program (DAP)
NO sales price limits, but the maximim financing availability is still set by FHA limits
Do not have to be a first time homebuyer to participate in HERO
Can be combined with additional FHA programs such as 203K