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One cannot afford to live in ignorance during these days of tough economy. There are different programs in place for all kinds of people in Austin. One might be fooled by wrong concepts and misconceptions that people have been spreading. Some people live in rented houses while they can be able to afford their own houses due to a believe that one should have a certain amount. Each loan has its own requirements and if one does not qualify for one, there is a particular program which can be suitable for them. First time home buyers with a bad credit are not left behind. This is because they can qualify for mortgages like USDA subject to further checking. The lender looks into every strong point and rewards if he is convinced.

There are conventional loans, conforming and non conforming loans. These loans can further be grouped into two that is qualified and non-qualified loans. It is worth noting that all conforming loans are conventional but not all conventional loans are conforming. Lenders usually sell mortgages to the secondary market and use the money earned from it for loan origination.

Most of the lending companies have a big source of funding. This can be a bank or any other big institution. When they get this funding, they purchase property and sell them to Fannie Mae or Freddie Mac. There is a legal binding that these two buy loans that are conforming to the guidelines. The body setting the rules is the federal housing finance agency (FHFA) HUD sets limits for FHA loans. Places with higher conforming rates are the high cost areas.

Non-conforming loans do not follow the guidelines of Fannie or Freddie and they have a high rate of mortgage interest and the fees charged are high. They are mortgages underwritten to guidelines and sold to other investors rather than Fannie Mae or Freddie Mac. Sometimes they hold the name “portfolio” loans. A non-conforming loan ends up being better than a conforming mortgage. Some people might go for non-conforming loans like a jumbo loan so that they can be able to buy a very expensive house.

These loans are suitable for those individuals who are not so optimistic about being granted the other kinds of loans because they are for example first time home buyers with a bad credit. However, they must have a good plan to see to it that the mortgage is paid off during the term smoothly. This does not just happen without looking at properties owned and other stronger sides. FHA loans can also be good because there are programs running under them w