Loan Options

Select the Mortgage That Fits Your Needs
Loan Options

REVERSE MORTGAGE

The circumstances for an individual can change rapidly especially when people start to age. If the person has taken a home mortgage, its repayment can become difficult with time when or after a person crosses a certain age. Therefore, a reverse mortgage provides the perfect opportunity for the homeowner that are above the age of 62 to receive tax-free cash against their home equity. They can then use the cash to pay off the mortgage or/and to cater other expenses such as medical costs, home renovation, or/and to meet day to day expenses. The paying-off of the mortgage eliminates the monthly mortgage payments which in turn gives the individual the chance to use their income for other expenses. Having said that, the individual still has to pay homeowners insurance and property taxes.

The reverse mortgage is payable after or when the last surviving member of the home decides to either leave the place, passes away, or decides to sell off the property. In either of the three conditions, the property is sold. The money that is received from the sale is used to pay off the reverse mortgage and the remaining, if any, is given to the left behind heirs. 

What Are the Requirements?

  • One or more occupants must be 62 years of age or more.
  • The applicant must reside at the property.
  • The property must be a single-family home, townhouse, two to four-unit owner-occupied, approved condominium unit or a manufactured one.
  • The applicant must have or must attend, either by phone or in person, an educational counseling session approved by the Department of Housing and Urban Development (HUD).
  • The applicant must have and must continue to pay property taxes and homeowners insurance promptly.

VA Mortgage

Individuals with past or recent military experience can avail the most economical monthly mortgage payment option known as the Veterans Affairs Mortgage. Supported by the United States Department of Veterans Affairs, the mortgage is mainly designed to offer a relatively cheaper, low income option for individuals that have served in the military and want to purchase their first home.

The VA mortgage is easy to attain as there is a leverage given on the debt ratio and the credit score requirements to the applicant. It is because of such easy stipulations and the following benefits that several low-income individuals and families have successfully been able to purchase their home.

Benefits for the applicant:

  • Zero down payment – The applicant does not have to pay any down payment to the lender and instead, can start from paying only monthly payments.
  • The seller has to endure most or all of the closing costs of the deal – There can be several costs when closing the deal such as appraisal fee, home inspection, many loan related fees, so and so forth. The seller would be taking care of most of these fees if not all.
  • Zero monthly mortgage insurance – The mortgage insurance is a decent amount of money that the borrower has to pay every month. But, in this instance, the monthly payments are waivered. It means that the borrower would have the opportunity to have extra money which can spend on other daily necessities.

USDA Home Loan

The United States Development Authority guaranteed home loan is designed to benefit families that are unable to purchase a home in the urban areas of the country and at the same time, it helps in populating the rural regions. The USDA home loan comes with zero down payment and anyone that does not own a home already and earns 115% of the area’s median income qualifies. But, the loan is only for certain selected areas and the positive point is that not all areas are rural. Some may be defined as suburban.

FHA Loan

The Federal Housing Authority guaranteed loan is a perfect opportunity for low-income earning individuals and families to purchase a home with only 3.5% down payment and little to no closing costs. The following are the further benefits that individual can take advantage of:

  • Debt ratio requirements are lenient which means that low-income individuals and families can qualify.
  • The applicant does not have to have a certain amount in their bank account after the closing of the loan.
  • Credit score as low as 580.
  • FHA down payment 3.5%.
  • High debt to income ratio may be acceptable – up to 46%-56% front and back-end-ratio.
  • Mortgage Insurance Premium until the maturity of the loan.
  • Lower Interest Rate.
  • Gift funds may be used for 100% of the down payment.
  • Sellers can contributes up to 6% of the closing costs.

FHA 203k

The Federal Housing Authority guaranteed 203k is a loan that allows the applicants to finance the purchase of a home and/or to use it for renovation. But, the renovation should be completed in six months. The houses that qualify must not be livable without renovation and should either be a one to four-unit property. The condos and townhome owners can apply for the loan but only for an interior renovation.

JUMBO MORTGAGE

The self-explanatory term is a loan for plus size homes. The homes that are above the conforming loans limits can be purchased with the help of Jumbo Mortgage. The threshold for the loan is $424,100 for normal territories and $636,150 for high-cost areas. There is a total of 3143 counties in the US and adjoining areas that contain such housing markets.

CONVENTIONAL LOAN

Not backed or guaranteed by Government Sponsored Entity, these loans are considered to be the safest types of mortgages. The conventional loans have two types, the amortized and adjustable. The amortized can be funded by any lender and the important factor is that the loan to value (LTV) cannot be less than 80%. The adjustable conventional loan is where the loan is fixed for a minimum of 3 and maximum of 7 years with the rest of the time (27 to 23 years) being subject to changes. The latter is better for people whose income tends to fluctuate. Advantages of Conventional loan:

  • No front-end mortgage insurance is required like FHA loans.
  • PMI automatically cancels when the loan-to-value ratio reaches 78%.
  • 3% down, lower than FHA.

Loan Proces

Step 1: Getting pre-qualified for a mortgage or Obtain a pre-approval
Before shopping for your dream home, you will need to know how much you can afford to qualify for a mortgage based on your financial circumstances.

Step 2: Deciding on a down payment: Can you afford 1%, 3%, 3.5, 5% and 10%? Generally speaking, lenders expect homebuyers to have enough money available to make the down payment - usually up to 20 percent of the asking price for the house and to pay closing costs (3 percent to 6 percent of the loan amount). The following sources for a down payment can be considered: savings, stocks and bonds, mutual funds, employee savings plans, Individual Retirement Accounts, even gift of money from parents or relatives that need not be repaid or grants from a nonprofit housing assistance organization for a part of your down payment.

Step 3: Locking in a mortgage rate: Interest rates are extremely volatile. If interest rates are generally increasing, an early rate-lock would save you money.

Step 4: Applying for a home loan: Submit all loan documents to your lender including the purchase contract.

Step 5: Mortgage loan processing and appraisals: During this step in the mortgage process, the lender will collect the information needed to process your loan. The appraiser will go to the home and appraise it based on the sales comparison in the neighborhood.

Step 6: Receiving a home loan approval / Loan Commitment: The lender will review the completed application and verify information included to make a credit decision on the application

Loan Programs

Fixed-Rate Mortgage: A Fixed Rate Mortgage help borrower obtain the security of a stable monthly payment throughout the life of the mortgage. Secondly, it leverages 15- and 20-year fixed-rate mortgages to build equity more quickly. Generally speaking, the shorter the term of a loan, the lower the interest rate.

Adjustable-Rate Mortgages: Variable or adjustable loan is loan whose interest rate fluctuates over the period of the loan. The periodic adjustments is based on changes in a defined index, are made to the interest rate.

Balloon loans: Balloon loans are short-term fixed-rate loans that have fixed monthly payments based usually upon a 30-year fully amortizing schedule and a lump sum payment at the end of its term. The advantage of this type of loan is lower monthly payment. The disadvantage is that at the end of the loan term, the borrower would need to pay off a lump sum to the lender, either through a refinance or from the sale proceed.

Option ARM: This loan program is an adjustable rate mortgage with added the flexibility of making one of several possible payments on your mortgage every month.

No Down Payment Loan (100% Financing) -- 80/20 Option: The main advantage of this type of loan, also known as 100% Financing, is the ability to buy a home with almost no money down

Combined (Hybrid) Loans: Hybrid loans, is a combination of fixed and ARM loan.

Graduated Payment Mortgages (GPMs): The mortgage starts low and steadily increase at fixed times. The advantage of this type of loan is that a lower initial payment allows you to qualify for a larger loan amount.

Buydown Mortgage: It is the type of loan with an initially discounted interest rate which gradually increases to an agreed-upon fixed rate usually within one to three years.

Interest Only: An interest-only payment option is offered on a fixed rate (FRM) or adjustable rate (ARM) mortgages or on option ARMs. The option to pay 'interest-only' lets you pay only the interest portion of your monthly payment for a fixed period (three, five, seven or ten years). At the end of that period, your loan becomes fully amortized, thus resulting in greatly increased monthly payments.

It is extremely important to choose the type of loan that will best suit your current circumstances. No one can tell you what is good for you. Ultimately, the decision lies with you. The right type of mortgage chiefly depends on how long you plan on staying in the house and the amount of monthly payment you can comfortably afford. If you don't plan to stay in your house for at least.

5 to 7 years, it will be reasonable to consider an Adjustable Rate Mortgage, Balloon Mortgage or Two-Step Mortgage.