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Loan Programs - Pros & Cons

Cherry Creek Mortgage is a DIRECT SELLER to Fannie Mae, Freddie Mac and Ginnie Mae. As a result we are not subject to the overlays imposed by many other lending institutions. Having both the direct seller as well as investor direct delivery options provides our clients and business partners with a variety of home loan programs to choose from, here are a few of our most popular loan options.

CONVENTIONAL LOANS

Conventional loans are not guaranteed by a government agency and follow guidelines of two Government sponsored enterprises, Fannie Mae & Freddie Mac. 

PROS

  • Lower monthly mortgage insurance,  making the overall payment lower.
  •  No mortgage insurance needed if  20% down. 
  • When mortgage insurance needed,  it ends when the equity in the  property is greater than 20%.
  • Property standards not as picky.
  •  Less paperwork involved. 

CONS

  • Holds buyer to a higher standard in  terms of credit, savings and debt-to-income.
  • Interest rate and monthly mortgage  insurance may be higher with lower  credit scores

FHA LOANS

FHA loans are insured by the Federal Housing Administration (part of HUD).

PROS

  • More flexibility with bruised or newer credit, limited savings or tighter debt-to-income.
  • Down payment can be gifted from a family member.
  • Interest rate may be lower than some conventional options.

CONS

  • Monthly mortgage insurance can be higher and in effect for the life of the loan if only the minimum down payment is made.
  • FHA charges a 1.75% upfront fee (rolled into the loan balance).
  • The property needs to meet a higher standard than needed for conventional loans.
  • More paperwork is involved

USDA LOANS

USDA loans are guaranteed by the USDA for homes in areas deemed ‘rural.’

PROS

  • No down payment needed.
  • Monthly mortgage insurance is less expensive, making the overall payment lower.
  • In some situations, the cost for repairs can be rolled into the loan.
  • Interest rate is often lower than for a conventional loan. 

CONS

  • Only homes in eligible areas can be financed with USDA mortgages.
  • USDA needs to review all files which often delays the closing process.
  • The home needs to meet minimum property standards set by USDA that are more stringent than some other loan types.

VETERANS ASSISTANCE LOANS

VA loans are guaranteed by the Department of Veteran Affairs for eligible Veterans.

PROS

  • Typically no down payment needed.
  • No monthly mortgage insurance, loans do require VA Funding Fee but which can be financed into the loan.
  • Interest rate may be lower than some conventional options.

CONS

  • Property needs to meet a slightly higher standard.
  • Seller may be required to pay some buyer related fees.
  • More paperwork is involved.