Choosing a Loan Program

There isn't a single or simple answer to this question. The right type of mortgage for you depends on many different factors:

Your current financial picture

How you expect your finances to change

How long you intend to keep your house

How comfortable you are with your mortgage payment changing

For example, a 15-year fixed rate mortgage can save you many thousands of dollars in interest payments over the life of the loan, but your monthly payments will be higher. An adjustable rate mortgage may get you started with a lower monthly payment than a fixed rate mortgage, but your payments could get higher when the interest rate changes.

The best way to find the "right" answer is to discuss your finances, and your plans, with Reliance Mortgage.

Here is a brief overview on a few programs:

FHA
Insured by the Government this is a low down payment and low mortgage insurance option. Currently one of the most popular loan products due to its somewhat more lenient credit guidelines and low down payments. FHA will soon require a down payment of 3.5% of the sales price of the home (plus closing costs.) Often, if a borrower is putting less than 10% down, the FHA is a good choice.

Down Payment Assistance
Allowed only on FHA loans this is a program whereby the seller makes a donation to a non-profit organization that in turn takes a fee off of the top and makes a gift to the homebuyer of the difference. This money was used to go towards the down payment and/or closing costs. New legislation terminates this program effective October 1, 2008

CHFA
The Colorado Housing Finance Authority offers a number of programs with various options including below market rates or assistance for down payment. It can be combined with the FHA, VA, Conventional, or Rural Development Loans. First-time homebuyers must take an education class and must contribute at least $1,000 of their own funds. This program is most often used to cover the down payment requirements. Closing costs will still need to be covered.

VA
The Veterans Administration offers 100% financing to eligible veterans and NO MONTHLY MORTGAGE INSURANCE. This allows veterans to get in with far less money – only closing costs- and has a lower monthly payment than the FHA loan would.

Rural Development
Rural Development loans are NO DOWNPAYMENT loans with NO MONTHLY MORTGAGE INSURANCE requirements. This allows you to bring less money to closing AND have a lower monthly payment than most other programs. This program, however, does have income restrictions and eligible properties are in cerain areas only. Contact us for more information!

Temporary Interest Rate Buy Down
Also called a Two-One Buy down this is a program that lets borrowers have a rate 2% below market for the first year; Once percent below market the second year, and then the market rate for the remaining 28 years of the loan. This is NOT to be confused with an adjustable rate loan were the rate changes are unknown and unpredictable. This program is set in stone and the payments are known upfront. This program is great for borrowers that know their financial position will be improving over the next two years. There is a fee to this option that can be paid in a number of ways. Contact Reliance Mortgage to find out more!