You may always pay principal on an owner occupied primary or secondary (such as a vacation home or pied-a-terre) residence even during the IO period without penalty. When you pay principle during the IO period the underlying balance is reduced in real time and your next mortgage payment (if the rate has not adjusted) will be lower because the actual amount that you owe has been reduced.
TYPES OF MORTGAGE PROVIDERS
Lenders offer both conventional and government backed loan instruments. Government-insured loans include the Federal Housing Administration (FHA) program (low down payment), the Veterans Affairs (VA) program (veterans and active service members), and the United States Department of Agriculture (USDA) program for specified rural locations. More detailed descriptions of these providers appear in Chapter Six. Conventional (non-government) loans come either from the lender's portfolio, outside investors, or are sold to Fannie Mae and Freddie Mac. Fannie and Freddie are the two government- sponsored real estate enterprises known also as GSEs, but they are not government insured in the manner of the Federal agencies named above. Non-QM Loans (Non-Qualified Mortgage): are a type of mortgage loan that does not meet the criteria or "qualifications" set forth by the Consumer Financial Protection Bureau (CFPB) for conventional mortgages, often referred to as Qualified Mortgages (QM). The primary difference between Non-QM loans and conventional loans lies in the types of documents, underwriting and borrower eligibility requirements. Non-QM loans are often more suitable for business owners, the self-employed, recipients of 1099s, gig workers and those who
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