There are many choices in mortgage loans.
The $700 billions bailout orchestrated by President Bush and Tresury was done with the intent of making mortgage money available and preventing foreclosures. Freddie Mac and Fannie Mae were completely taken over by the federal government. They are making loans more available to the public.
Right now, the publicity has been on the evils APR's, balloon mortgages, deceptive loans, and the problems this is
causing home buyers as interest rates rise and home prices fall. Congress is working to simplify the loan application and make the process more transparent. The lending institution and large banks like Chase and Citi are talking about refinancing millions of dollars in delinquent loans. They seem to be nice guys wearing white hats. Don't be mislead. Many of the people are the same self-serving people that duped the unsuspecting in the first place.
As you are reading this, a mortgage broker, banker, or hedgfund manager somewhere is devising another way to structure a mortagage loan. The more confusing choices the better to sell you a loan structured to the lenders' advantage. Notice I said "sell" you a loan. That is because the mortgage lender you speak with is a salesperson. Do they seem to be on your side and have your interest at heart? Are they talking about how things have changed and now you do not have to worry about reading the contract as Congress has them so regulated they have are watchdogs over you themselves. Watch out! Buyer beware! That is the way some unsrupulous salespeople present themselves. As we are finding out, in this industry, that is a high percentage of the sales people.
Considering the problems people with ballon mortgages and ARM's are having now, a conventional loan is probably your best loan. If you need more convincing, look up Countrywide on the internet. Once you have decided on a Conventional Loan, or whicever loan you have decided, you are half-way home in the decision making. You can now compare apples to apples. When a lender tries to get you to look at a different program, pull them up short and let them know you are only interested in the mortgage program you have decided upon.
Wherever you decide to get your loan, you will need to provide the lender with plans, specs (specifications), and a budget generated by the plans and specs. To prepare the specs and generate the budget, the builder must be included. You can get pre qualified for the loan based on the budget generated and the appraised value of your new home. However, you will not get the financing until a contract with a reputable builder is signed. With the internet and financial institutions growing like weeds, you would think it would be a snap to compare mortgage offers. Wrong. Hidden costs, excessive points, and underhanded schemes make comparisons difficult. There is a big difference between mortgage lenders and mortgage brokers. Mortgage lenders have money to lend. Mortgage brokers have none. Mortgage brokers make money by "shopping your application". They get a loan amount and mark it up. This is done by adding additional fees as well as extra points to the loan. One point equals about 12.5% of a percent you will be agreeing to pay for the life of the loan. One point adds up to a lot of money. Many different forms of mortgages are available today.
