Orange County Mortgage Programs Every Buyer Should Know About
Mortgages are not designed to fit everyone’s situation. Each home buyer has their own unique credit and financial condition, which is the reason that different loan programs work better for some people.
We’ll discuss the following types of mortgage programs and products that borrowers are able to pick from. The bulk of home loans for buying or refinancing belong to one of these three categories.
Summary of Orange County Mortgage Programs
Conventional home loans
In most cases, this is the typical mortgage applied for and done in Orange County. For that matter it is the most common in the country. A conventional home loan is a mortgage that the federal government does not guarantee or insure.
Alternatively, the loan is backed by private lenders, and its insurance is typically paid by the borrower. This distinguishes it from the two other mortgage programs mentioned below, which do have some insurance by the government.
Conventional loans are offered to qualified applicants on either a fixed and adjustable rates, along with various terms. The majority of borrowers select either a 15- or 30-year term. A 15-year term means borrower is able to pay off their mortgage earlier than a 30-year term.
The difference is they save a significant amount of interest paid. The trade-off is the mortgage payments will be much higher. A mortgage term with 30-years has considerably lower monthly payments, with the disadvantage of paying back more money in interest through the entire loan repayment period of 30 years.
FHA loans
The Federal Housing Administration (FHA) home loan program is a mortgage insured by the government agency known as the FHA. This home financing program is mainly targeted for people who have both a low down payment and credit scores less than 640.
Although some home buyers who have high credit scores still use FHA loans. FHA loans offer down payments as low as 3.5% with flexible credit qualification standards.
VA loans
This is another residential mortgage program that comes with government backing. However, this loan is guaranteed by the U.S. Department of Veterans Affairs (VA).
This loan product is restricted to military service members and veterans, and in certain circumstances their spouses. The most attractive element of this mortgage loan is the 100% financing up to a certain amount. That means eligible borrowers are able to purchase a home in Orange County with zero money down up to the county’s conforming loan limit.
Conforming compared to Jumbo Loans
When exploring mortgage loan programs in Orange County, you should not be surprised to come across the terms “conforming” and “jumbo.” These terms relate to the loan amount size, in relation to Freddie Mac and Fannie Mae established guidelines.
Here’s what contrasts the two:
A conforming loan is a conventional home loan that meets or “conforms” to the loan limits set by Fannie Mae and Freddie Mac, also known as government-sponsored enterprises (GSEs). When the loan satisfies their requirements, a conforming loan may be sold to Fannie or Freddie, and then sold once more to investors.
The conforming size limit is $765,600 for a single-family home in Orange County, California. That limit may change once the year 2020 is completed.
A jumbo loan is one that is higher than the conforming limit in that specific county. It is For that reason, it’s regarded as non-conforming, and are not able to be sold to the GSEs.
The conditions to qualify are commonly slightly more strict for jumbo mortgage products in Orange County, since it’s a larger-sized loan that creates additional risk.
There are quite a few mortgage programs that 1st Nationwide Mortgage can provide to you based on your financial situation. We are a Orange County mortgage company based in Aliso Viejo, California and serve the entire state, as well as Arizona, Colorado, Oregon, Virginia and Washington. Don’t hesitate to contact us with any mortgage questions or ready to begin the loan process!
Scott is a Business Development Manager at 1stNWM. He blogs about home loans, personal finance and lives in Orange County, CA. He feels good about sharing his expertise and real world stories of successful real estate transactions. when he’s not at work, he is with his bestie, a four-legged furry and often sloberring Saint Bernard, Wyatt.