Loan Programs

FHA Loans

Here are a few of the beneficial features:

Low Down Payments – As little as 3.5% down will work in most instances, and 5% covers most others.

Higher Loan Amounts – In some areas, FHA maximums can exceed conventional loan limits.

Lower Total Cash to Close – Sellers can help pay closing costs, and borrowers can receive gift money toward their down payments.

Streamlined and Cash Out Refinancing – Subsequent refinancing can be far easier and more lenient than with conventional loans.

Purchase and Rehab Financing – The FHA 203k loan can be a great option for the purchase of homes in need of a quick spruce up or even major remodeling when you don’t have sufficient funds to do it on your own.

The FHA program continues to evolve. Both the upfront and ongoing mortgage insurance costs have become more expensive. While the increase makes these loans less advantageous than in the past, they are still a good option if your needs and situation preclude you from qualifying for a conventional loan.

VA Loan

Veteran’s Administration or “VA” loans are available for active, non-active and retired Army, Air Force, Marine, Navy, National Guard and Coast Guard vets who meet the established service requirements.

• 100% financing/No down payment
• No monthly mortgage insurance (PMI)
• Gift funds acceptable for closing costs
• No cash reserve requirements
• A variety of terms or loan types available
• Available for purchase and refinance
• Reduced costs for disabled veterans
• Seller can pay for closing costs
• Seller pays for any required repairs
• No pre-payment penalty

To determine your ability to participate in this program, just provide your Certificate of Eligibility (COE) or your Discharge/Separation form (DD214). If you do not have your COE, you can request one using form 26-1880.

ARM’s

The truth is ARMs are not all the same and can have great value.

Home buyers often focus on obtaining the lowest possible rate on a 30-year loan, but most mortgage loans are used for only three. Cash out transactions for improvements, additions, repairs, weddings, tuition and major purchases occur with great frequency. If you think you might refinance for any reason anytime in the next seven years, read on.

Lower Rates, Flexible Terms – Today, most ARMs are “hybrids.” They start out at a fixed rate for the first 3, 5, 7 or even 10 years. During this time, you save on interest cost, and even though your payment is less, you still pay more toward principal.

Inside Information – Lenders give you a discounted rate up front because they know the rate will float with the market later on. If you sell your home or refinance again prior to that happening, it’s their loss. You have the advantage here because you control the timing of your next step.

Managed Risk – One way to prepare for the possibility of a higher rate and payment later is to pay extra principal each month to reduce your balance faster. If the rate ultimately adjusts up, your balance will be lower and the payment change will be less as a result. As well, you would already be accustomed to paying more.

The Bottom Line – A fixed rate loan provides the certainty that it will never change. A hybrid ARM provides a guaranteed savings but for a limited period of time. The best way to decide is to balance your expectations for using any particular loan with the peace of mind that can come from being assured of stability, even if your time frame changes.

Reverse Mortgage

Your parents could live the remainder of their years not paying a mortgage* and maybe even getting a monthly check as long as they live in their home.

Really? Really.

Your parents may be eligible for an FHA Reverse Mortgage if they are 62 or older, meet financial requirements and have sufficient equity in their home. They will need to live in the home as their principal residence, maintain it, and pay taxes and insurance.

How It Works
Proceeds from a reverse mortgage first pay off the current mortgage on the home, if applicable. Your parents can access additional funds through a lump sum payment, a line of credit or monthly installments. The amount available depends on the amount of equity they have in their home, settlement costs, interest rates, and their ages. In some cases, funds to pay taxes and insurance are set aside at closing or withheld from regular disbursements.

Points to Remember:

• A reverse mortgage is a loan. Loan costs include interest, FHA Mortgage Insurance, and initial fees. It will come due when the last title holder of the property dies or when the title holder(s) sell or move from the home.
• Because of FHA insurance, neither your parents nor their estate will be required to pay more than the value of the home at sale, even if the amount due is higher than the home’s value.
• The home can stay in the family. Heirs will pay the amount owed or 95% of the home’s appraised value, whichever is less.
• Your parents will speak with an independent HUD-certified housing counselor before formal application is made. You are encouraged to attend.

30 Year Fixed Rate

Most common loan type.

• Gives you lower monthly payments than the 15-year option, which will help out financially if unforeseen expenses arise.
• Taxes and insurance may increase but the interest rate is locked so the bulk of your payment is fixed.

15 Year Fixed Rate

• Over time, you will pay less interest and more of your principal.
• You could be looking to live mortgage free in just 15 years!
• Your interest rate stays locked throughout the life of your loan so you will be able to budget well knowing what your payment will be every month.
• The tradeoff is a higher monthly payment but it is a much quicker path to home equity.