Mortgage Loan Programs
This program is designed for eligible persons who served in the military on active duty or as a reservist. This program was established in 1944 and guarantee a portion of the loan against foreclosure. The VA program allows for 100% financing and does not require a down payment. In addition, the seller can pay all closing cost on the buyers behalf.
Federal Housing Administration Loans were originally designed by the government to help low and moderate income families. FHA Insures Lenders against default by borrowers. Mortgage Insurance is require no matter the amount of money that is put down toward the purchase price. FHA loans are used in conjunction with most HUD approved Down Payment Assistance Programs. Currently, the required down payment for a FHA loan is 3.5% and the seller can pay up to 6% of closing cost on the buyer’s behalf.
FHA 203k Full and Streamline
This FHA type of loan can be used to acquire and “fix up” the property of your choice. This loan combines acquisition and improvement into one single loan, one payment, and one interest rate. The costs of improvements are funded in incremental payments as needed by the contractor. The 203k full will be used for improvement prices about 35k and will be required to have a FHA 203k inspector involved. The 203k streamline will be used for improved priced below 35k and does not require the use of a 203k inspector. Both programs consist of a 3.5% down payment and will allow the seller to pay 6% of the buyers closing cost.
This program is a variation of the fixed rate mortgage. A buyer and seller can negotiate to pay the Lender a sum of money at closing to reduce the buyers monthly payment (interest rate) initially. The interest rate for the two year period might be 6.5% as an example and it is bought down to 4.5% the first year and 5.5% the second year. This enables the first time homebuyer to qualify for a larger mortgage the first year. The second year is still affordable with an addition of only 1% interest with the third year reaching the rate 6.5% which will remain the fixed rate for the term of the loan.
The Adjustable Rate Mortgage was developed in the late 1970s this program quickly became popular because of the low initial payment. ARM payment will adjust throughout the term of the loan. This program contains monthly payments that are not fixed and are subject to changes in the interest rate as a result of a pre-determined index ( 1, 3, or 5 years as an example).
This loan has three characteristics. Initial Interest Rate – the interest rate offered at the beginning of the ARM loan. Interest Rate cap – A limit placed on the amount that an interest rate can increase or decrease during any adjustment period. Conversion Clause – Allows the borrower to change the ARM to a fixed rate loan at some point during the term of the mortgage.
Conventional Fixed Rate
Standard product used by most lending institutions. Years ago conventional loan required 20% down. Now conventional loans are more flexible and do not require a large down payment. Typical down payments will range from 5% – 10% for most Conventional loans. There are no fluctuations with the payment and will be consistent throughout the term of the loan.
40 Year Fixed Rate Mortgage
Similar to the conventional 30 year mortgage. The 40 year term mortgage will allow you to stretch your payment to 40 years. Payments will be lower due to the 10 additional years. Payments are consistent and the program requires a down payment between 3 – 10%. The seller will be allowed to pay up to 3% of closing cost.
Interest Only Loan
This program allows you to make payments toward the interest on your loan only. The principle would not be decreased during the term of the loan. Payments are usually lower as compared to a Principle and Interest payment. This program can be offered in conjunction with a 30 year term, 30 year term or a 10 year term (after 10 years the note would change to a principle and interest payment).
Construction To Permanent Mortgages
This conventional Products that will combine construction loan parameters with long term permanent financing. A construction loan usually runs from 4 to 12 months and is designed to finance the construction of a new home. (New home complex or builder site) It differs from a permanent loan, which normally runs from 15 to 30 years. With a construction-to-permanent loan there is one closing, but two objectives are met: (1) a loan is obtained to cover the building of the structure, and (2) the long-term financing is secured. When the construction phase has ended, the loan covert to permanent financing. A construction-to-permanent loan is most often granted when land is owned outright.
This Conventional Product will span the gap between the end of one loan and the start of a brand new loan. The most common use of a bridge loan is to obtain the equity from a current residence to use for the down payment or closing cost for a new home. After the new home has been settled, the bridge loan would be satisfied through the sale of the old property. Bridge loans are typically for six-month terms with a renewal option for another six month.
Reverse Annuity Mortgages
The interest rate on Reverse Annuity Mortgages (RAMs) is usually fixed and the payments are not included. This loan is due when the home is sold or upon death of the borrower. The term may be fixed and have refinancing options.
A reverse annuity mortgage is attractive to borrowers on fixed incomes who need the equity to supplement their monthly incomes while continuing to own, live in and maintain the property. With this mortgage, the lender appraises the home and offers a loan based upon a certain percentage of the home’s current value. The payments are made directly to the borrower by the lender. The lender becomes due upon a specific date, or the sale of the property, or the death of the borrower, whichever comes first.
Land Installment Contracts
With this type of quasi loan, the borrower makes payments without possessing the title or ownership. The title is not conveyed until a certain number of payments are made or the property has been refinanced. The borrower has equity interest only. If one payment is missed, the borrower could lose the property. This agreement was popular when interest rates were high and homes were sold with loans that could not be assumed.
Energy Efficient Mortgage
The Energy Efficient Mortgage (EEM) has been around since the late 1970s.
With an EEM, the borrower increase the mortgage loan by as much as an additional $8,000.00 to install energy conservation measures such as storm windows, solar panels and automatic thermostats. The loan payments rise accordingly, but the borrower’s savings on the utility bills over the life of the loan normally equal or surpass the installment costs. The improvements can also raise the resale value of the home, and in some cases, can raise property values.
This government loan allows buyers to purchase a home with no money down. This 100% down financing program is geared toward purchases of homes in certain rural areas. Unlike most other loans, this program does not require mortgage insurance. There is a funding fee, similar to VA and FHA that will be financed within the loan. This program also allows the seller to pay up to 6% of the buyers closing cost.
$100 Down FHA
This is a great program for those with “vision”. This program allows you to purchase a designated home for $100.00 down. Visit HUD’s website to view homes that are available. Most likely, you will be using the 203k loan to complete needed improvements. This program allows for the seller to pay up to 6% of the buyers closing cost.
Officers And Teachers Next Door Program
This is a FHA type of loan was designed for those serving our community. Law enforcement officers, pre-Kindergarten through 12th grade teachers and firefighters/emergency medical technicians can contribute to community revitalization while becoming homeowners through HUD’s Good Neighbor Next Door Sales Program. HUD offers a substantial incentive in the form of a discount of 50% from the list price of the home. In return you must commit to live in the property for 36 months as your sole residence. This program allows for the seller to pay up to 6% of the buyers closing cost.
Home Path Program
This program is for specific properties designated “Home Path”. This program was designed for homes owned by Fannie Mae and have been indicated to qualify for this program. The down payment for this program is 3%. No PMI is required and many times an appraisal won’t be required. This program allows you to complete home improvement tasks similar to the 203k financing program. Sellers are allowed to contribute up to 6% of the buyers closing cost.