Fixed Rate Mortgage Loans
The interest rate is fixed for the life of the loan, regardless of what rates do over the life of your loan. This ensures that your payment remains the same each month, which can make budgeting a lot easier. However, if your loan has an escrow account that is collecting for taxes or insurance, that likely will change over time and cause your payment amount to change annually. Conventional Fixed Rate Mortgage Loans are typically available in terms of 15, 20 and 30 years.
Adjustable Rate Mortgage Loans (ARMs)
The interest rate changes periodically by adding what’s referred to as a “margin” to an index specified in mortgage documents. These two numbers are combined to create the loan’s interest rate and often times have limits (sometimes referred to as “caps and collars”) that ensure the rate does not increase over a certain amount over the life of the loan. As an example, a 1-year ARM will adjust every year, typically on the anniversary date of the loan.
Because the rate changes as the index changes with fluctuations in the market, monthly payments on an adjustable rate mortgage loan likely will be different every year. However, if you are planning on being in your home a short period of time, an ARM may be a very good option with a lower interest rate.
FHA Mortgage Loans
Despite what many people think, the Federal Housing Administration (FHA) does not actually issue mortgage loans; it insures the loans for investors that purchased bond instruments secured by FHA home loans. Customers like FHA loans because they have more liberal qualification requirements.
In addition, they typically have a lower down payment requirement (as low as 3.5%), lower monthly insurance premiums and often have lower closing costs. This makes an FHA loan a very attractive loan for the first-time homebuyer and also for families with low and moderate income levels.
FHA 203(k) Rehabilitation Loans
These types of loans can be used to make improvements to an existing property. Use the funds for simple upgrades to your home like a kitchen or bath improvement, or to completely reconstruct a home that is presently unlivable. You can even use a 203(k) Rehabilitation Loan to tear down an existing structure and build a new one using some portion of the existing foundation. You can borrow up to 96.5% of the appraised value – based on the value when the improvements or repairs are completed.
VA Mortgage Loans
Similar to FHA loans, VA loans are guaranteed by the U.S. Department of Veteran Affairs and lenders like Ruoff Home Mortgage make the loans to eligible veterans for the purchase, construction, or energy-saving improvement (approved by the lender and VA) of a home. VA loans share similar eligibility requirements as FHA loans, often with lower closing costs, and more liberal terms (usually without requiring a down payment) and even negotiable interest rates. If you qualify, the VA will issue a certificate of eligibility that you can provide a lender when making application for your loan.
Reverse Mortgage Loans (HECM)
A reverse mortgage is designed specifically for homeowners 62 or older. This product helps them benefit from the equity they have built in their home without having to sell their house or make payments. The loan can be funded through a lump sum payment, monthly payments or even a line-of-credit. One of the primary advantages to a reverse mortgage is the loan does not have to be paid until the homeowner sells the property, or no longer lives in the home.
In addition, the money received from the loan is not considered taxable income, nor is it considered in determining Social Security or Medicare benefits. The homeowner is secure in their home even if the loan term ends or the loan grows beyond the value of the property.
USDA (Rural Development) Mortgage Loans
Under the Guaranteed Loan program, Rural Development guarantees loans made by private sector lenders. A loan guaranteed through RD means that, should the individual borrower default on the loan, RD will pay the private financier for the loan. The individual works with the private lender and makes his or her payments to that lender.
Under the terms of the program, an individual or family may borrow up to 102% of the appraised value of the home, which eliminates the need for a down payment. Since a common barrier to owning a home for many low-income families is the lack of funds to make a down payment, the availability of the loan guarantees from RD makes the reality of owning a home available to a much larger percentage of Americans.
New Home Construction Loans
If you are getting ready to undertake a building project, whether it’s your new dream home or an addition, Ruoff Home Mortgage has the perfect construction loan programs to fit your needs. We work closely with many area builders and have a simple draw procedure to ensure that your project remains on track as your dream home becomes a reality.
Indiana Housing and Community Development Authority
Mortgage Credit Certificate
If you’re planning to purchase your first home, the Indiana Housing and Community Development Authority can help you put money back in your wallet or pocketbook with a Homeownership Tax Credit (also known as a federal Mortgage Credit Certificate, or MCC).Here’s how the Homeownership Tax Credit works. You obtain a mortgage through a participating lender. In addition to your mortgage, you will receive a certificate that offers you a federal tax credit of up to $2,000 per year.
IHCDA Next Home Program – FHA
The Indiana Housing and Community Development Authority makes the process of buying a home a reality for thousands of Hoosier families.
The Next Home Program is designed to help first time, previous or current homeowners obtain a new home without a purchase price limit. Both FHA and Conventional options are available.