Getting A Guarantee Residential Loan
Category : Real Estate Loans , Residential Loans
A part of the thrust of the United States Government is to provide housing to its constituents and improve the quality of life of the people. With this thrust of the government, there is a number of government guaranteed loans being offered to Americans to help them achieve their dreams. Some of the government guaranteed loans being offered in the market nowadays are student loans, the residential housing loan, the veteran’s loan, and the loans for entrepreneurs and farmers. Government guaranteed loans are usually favorable to both the lender and the borrower, since the guarantee given by the government over the loan would mean more flexibility in the terms and conditions of such loans.
In the case of guaranteed residential loans, the guaranteed type of loan can greatly help people who want to own a residential home, even if they do not have the collateral to secure their loan. According to guidelines issued regarding guaranteed residential loans, this program will allow the use of private sector funds for housing loans with no down payment and no mortgage insurance. This is for certain groups of people or families, such as those who are living in rural areas with low to moderate income.
How does it work? Government guaranteed loans are usually extended to target beneficiaries through banks and lending institutions who are affiliated with the loan program. These banks and lending institutions will issue the loan while the government will pledge help in the event of the borrower defaulting in the payment of the loan. The government, through its designated agency, will purchase the unpaid portion of the loan, thereby saving the bank or lending institutions form losses.