Loan Programs

Fixed Rate Mortgage

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A "fixed" rate mortgage is best for the following individuals:

• Those that plan for their future
• That are not risk takers
• For borrowers with consistent and reliable income
• Those that plan to keep their home for at least seven years or more

This type of mortgage has an interest rate and monthly mortgage payment which will remain the same for the life of the loan. The interest rate and monthly payment amount are established when the rate is locked on the loan. Essentially you may pay slightly more for the security of a fixed-rate mortgage, but for many people, the resulting peace of mind is worth it. There are 15- 20 and 30- year terms available on both conforming and jumbo loans with a variety of loan features.

• Guaranteed rate for the term of the loan the interest rate has been locked
• The interest rate cannot rise once the loan has been locked and loan funded
• The monthly mortgage payment is fixed
• For 15 year mortgages you pay the loan balance off more quickly that on a 20, 30 year term
• The equity builds up more quickly the shorter the term of the loan
• For income tax purposes, on a 30 year term, there is the most maximum interest deduction

• On 15, 20 and 30 year terms the rate is fixed over the life of the loan
• On balloon loans (such as a 30 due in 7), the loan balance is due at the end of the seventh year in the form of a “balloon” payment. At that time you would have the option to refinance the remaining twenty three years or pay the balance due.

Traditional ARMs (Adjustable Rate Mortgages)

• Those borrowers who want the stability of a low fixed rate for a set period of time.
• Borrowers who prefer to keep extra cash on-hand for investing or other needs.
• Those who want a fully-amortizing product.
• Homeowners intending to live in their home for five years or less

The Traditional ARM product offers borrowers the features of a fixed rate loan but for the value of an adjustable rate mortgage. The rate will adjust annually but the ARM will start with an initially low fixed rate for one, three, five, seven or ten years. The periodic caps will determine when the rate will increase/decrease but the lifetime cap determines the most an ARM can adjust over the life of a loan.

Characteristically, ARM interest rates are tied to a specific financial index (such as Certificate of Deposit index, Treasury or T-Bill rate, Cost of Funds-Indexed Arms or COFI, or LIBOR [London Interbank Offered Rate]) and the payment will be based on the index your lender uses plus a margin, generally of two to three points. This formula can be obtained in writing from the lender so that you ensure understanding of what is means.

• Set payments for a specific period of time
• Low qualifying rates
• Initial monthly mortgage payments that are less than a typical fixed rate mortgage

• 15 and 30 year terms
• 1, 3, 5, 7, 10 year initial fixed rate periods before the ARM adjusts

Construction Loans

Construction loans typically are short-term loans used for the building or renovation of a home. The term of construction loans depends on the project and how much time it will take to complete. Monthly payments on construction loans usually are interest-only with variable rates tied to the prime rate or some short-term interest rate. Interest is charged on the outstanding balance, so the borrower should expect their monthly payments to increase as money is drawn for the project. The final balance of these loans is paid off using long-term mortgage loans such as fixed rate mortgages or adjustable rate mortgages.

Home Equity Loans/Lines of Credit

Although many lenders no longer offer “Home Equity Loans” or “Home Equity Lines of Credit” that doesn’t mean that they aren’t still available. We work with a handful of lenders that still offer this type of loan for borrowers who fit the strict underwriting guidelines for this program type.

This type of revolving credit is extremely practical for those who may wish to borrow on a continuous basis. Because the line is secured by the equity in your home, it is considered to be less risky than credit card lines which are not secured with any type of collateral. For this reason, HELOCs generally carry a lower interest rate than traditional (non-HELOC) lines of credit.

FHA LOANS

• Only a 3.5 percent down payment is required.
• Closing costs can be financed.
• Lower monthly mortgage insurance premiums and, under certain conditions, automatic cancelation of the premium.
• More flexible underwriting criteria than conventional loans
• Loans are assumable to qualified buyers.

• FHA 203(b) This FHA mortgage loan is funded by an approved lending institution and insured by HUD
• FHA 203(h) This FHA mortgage is for victims of a major disaster who have lost their homes and are in the process of rebuilding or buying another home.
• FHA Section 255 Home Equity Conversion Mortgage (HECM) aka Reverse Mortgage This FHA mortgage loan is for senior homeowners age 62 and older who want to convert the equity in their home into monthly streams of income and/or a line of credit to be repaid when they no longer occupy the home.
• FHA 203(k) Mortgage HUD's primary FHA program for the rehabilitation and repair of single family properties.
• FHA 203(k) Streamline Mortgage This FHA Loan program permits homebuyers to finance an additional $35,000 into their mortgage to improve or upgrade their home before move-in.
• FHA Energy Efficiency Mortgages FHA mortgage program helping homebuyers or homeowners save money on utility bills by enabling them to finance the cost of adding energy-efficiency features to new or existing housing as part of their FHA-insured home purchase or refinancing mortgage.
• FHA Adjustable Rate Mortgage
• FHA Mortgage Buydown program

FHA Streamline Refinance

The FHA Streamline Refinance is for homeowners who currently have an FHA mortgage on their primary residence. There are two types of Streamline Refinances; FHA Streamline Refinance without an Appraisal and FHA Streamline Refinance with an Appraisal. The difference between the two is this: An appraisal is required if the new loan amount exceeds the existing mortgage's original balance. If the new loan doesn't exceed the existing mortgage's original balance, no appraisal is necessary.

• A lower rate
• A lower payment
• The rate is assumable to potential homeowners when you go to sell your home
• The borrower receives a refund of the unused portion of the Up Front Mortgage Insurance Premium through the transaction
• The ability to skip a mortgage payment!

EXAMPLE: On a $250,000 mortgage, with an interest rate of 6.5%, on a 30 year fixed mortgage, the mortgage payment is approximately $1580.17.

POTENTIAL SAVINGS: By simply reducing the interest rate from 6.5% to 5.5% the monthly payment would be approximately $1419.47 a month. That's a monthly savings of $160.70 a month; $1928.40 a year; $19,284.00 over a decade and $57,852.00 over the course of the 30 year mortgage!

The following changes went into effect November 17th, 2009 for the ever popular, FHA Streamline Refinance program. On September 18, 2009 HUD released an update to its FHA Refinance guidelines. The following changes now apply:

• Must ensure that the FHA borrower(s) are employed and have income
• Borrower(s) must provide assets documentation
• A full appraisal is required if closing costs are going to be rolled into the loan
• The new MAXIMUM loan amount is calculated as follows:

Outstanding principal balance (including 30 days of interest from the first of the month) MINUS the UPMIP refund PLUS the new UFMIP = MAXIMUM new loan amount

• Current loan must have a minimum of six months seasoning
• Current loans with 6-12 months seasoning CANNOT have any 30 day late payments
• Current loans with 12 months seasoning or greater allow for ONE 30 day late in the last twelve months
• Refinance MUST reduce current PITI by 5%
• If the term of the new loan is reduced from the current term, the loan is considered a rate/term refinance
• Investment properties/second homes are no longer eligible for this program
• Mortgage Brokers are now required to document in writing that the borrower(s) are employed and collecting income
• Payoff statement of current mortgage CANNOT include delinquent interest, late charges, or escrow shortages
• The maximum CLTV is 125% of the new value or the original value if the loan is processed WITHOUT an appraisal.

VA LOANS

VA guaranteed loans are made by lenders and guaranteed by the U.S. Department of Veteran Affairs (VA) to eligible veterans for the purchase of a home. The guaranty means the lender is protected against loss if you fail to repay the loan. In most cases, no down payment is required on a VA guaranteed loan and the borrower usually receives a lower interest rate than is ordinarily available with other loans.

• Negotiable interest rates
• Closing costs are comparable and sometimes lower - than other financing types
• No private mortgage insurance requirement
• Right to prepay loan without penalties
• The Mortgage can be taken over (or assumed) by the buyer when a home is sold

Although mortgage insurance is not required, the VA charges a funding fee to issue a guarantee to a lender against borrower default on a mortgage. The fee may be paid in cash by the buyer or seller, or it may be financed in the loan amount.

A VA loan can be used to buy a home, build a home and even improve a home with energy-saving features such as solar or heating/cooling systems, water heaters, insulation, weather-stripping/caulking, storm windows/doors or other energy efficient improvements approved by the lender and VA.

Veterans can apply for a VA loan with any mortgage lender that participates in the VA home loan program. A Certificate of Eligibility from the VA must be presented to the lender to qualify for the loan.