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Common Loans

This guide is a brief overview of some of the most popular and frequently used mortgage loan financing programs offered by most mortgage lenders. They offer a large selection of loans and loan programs to suit just about any prospective home buyer's needs but this guide outlines just a few examples.


FHA 203b LOANS
FHA (Federal Housing Administration) is a part of HUD (U.S. Department of Housing and Urban Development). FHA was originally established by The National Housing Act of 1934 to help insure loans made by mortgage lenders to protect against losses in the event of a foreclosure. FHA, as a part of HUD, establishes the guidelines mortgage lenders use to approve the borrowers and properties FHA insures.

FHA 203b loans have specific 33%/41% Debt to Income ratios.
FHA 203b loans have a Mortgage Insurance Premium (MIP) which is paid up front in the amount of 2.25% of the base loan amount, and a Monthly Mortgage Insurance (MMI), which is paid monthly in the amount of .0416% of the base loan amount.

FHA 203b loans may be for a term of 15 or 30 years, and at a fixed, adjustable or graduated rate of interest.

FHA 203b loans may have a Loan to Value (LTV) of up to 97%. At least a 3% cash investment is required. The mortgage loan amount is calculated using the lesser of the purchase price or the appraised value.

In order be able to utilize the FHA 203b loan, the property must be occupied by the primary borrower. A primary borrower owning a residence with an FHA insured mortgage that they intend to keep may not purchase another principal residence with an FHA 203b mortgage loan.

On properties using FHA 203b financing, any money you will need for the down payment, closing costs, and to establish an impound account may have been saved by you, it may be a gift from a relative, it can be a loan against your retirement account, or it can be any combination of all three.

FHA 203b loan payments are calculated monthly to include a portion of the property taxes, homeowner's insurance, mortgage insurance, and homeowner's association dues (if applicable). These additional monies are called impounds.

The property used for a FHA 203b loan must have direct access to a paved or all weather surface road.

The property for a FHA 203b loan must have dependable water and waste systems approved by an FHA approved appraiser, and state authorities.

The property for a FHA 203b loan must show an adequacy of electrical, plumbing, heating, air conditioning, energy efficiency, sewage disposal, and water supply. This must be certified by an FHA approved appraiser, and state licensed termite inspector.

The Seller of the property using an FHA 203b loan may contribute up to 6% of the purchase price towards your Loan Discount Points, and/or Pre-Paid expenses. The Seller of the property may not contribute anything towards your Closing costs.

VA LOANS
VA refers to the U. S. Department of Veterans Affairs. VA, unlike FHA, does not insure home loans, but guarantees them. Direct endorsed mortgage lenders can make loans with no down payment and better qualifying guidelines than Conventional or FHA loans because the VA guarantee protects them from losses due to foreclosure. VA allows mortgage lenders to use flexibility in using these VA qualifying guidelines.

For VA home loan purposes, a veteran is a person who served in the active military, naval, or air service, and who, except for a service member on active duty, was discharged or released from active duty under conditions other than dishonorable. The un-remarried surviving spouse of a veteran is also considered to be a veteran for certain benefits under Title 38, U.S. Code.

VA loans have specific 41% Debt to Income ratios.

VA loans have an VAFF (Veterans Administration Mortgage Trust Fee) which is paid up front in the amount of 2% of the base loan amount for the 1st time home buyer, and 3% of the base loan amount for the repeat home buyer.

VA loans may be for a term of 15 or 30 years, and only at a fixed rate of interest.

VA loans may have a Loan to Value (LTV) of up to 100%. No down payment is required. The mortgage loan amount is calculated using the lesser of the purchase price or the appraised value.

VA loans are used for the purchase or construction of a dwelling to be owned and occupied by the veteran as the primary residence. Multi family properties are not eligible for VA loans.

To restore VA eligibility, the Veteran must have paid the previous VA loan off in full and sold the property, or have had a qualified veteran substitute their eligibility, and release the Veteran from liability, and have sold the property.

On properties using VA financing, any money you will need (if any) for the down payment, closing costs, and to establish an impound account may have been saved by you, it may be a gift from a relative, it can be a loan against your retirement account, or it can be any combination of all three.

VA loan payments are calculated monthly to include a portion of the property taxes, homeowner's insurance, and homeowner's association dues (if applicable). These additional monies are called impounds.

The property used for a VA loan must have direct access to a paved or all weather surface road.

The property for a VA loan must have dependable water and waste systems approved by a VA approved appraiser and state authorities.

The property for a VA loan must show an adequacy of electrical, plumbing, heating, air conditioning, energy efficiency, sewage disposal, and water supply. This must be certified by a VA approved appraiser, and a state licensed termite inspector.

The Seller of the property using a VA loan may contribute up to 6% of the purchase price towards your Closing costs and/or Pre-Paid expenses. Of special note is that VA borrowers are not allowed to pay certain fees such as escrow and notary fees.

CONVENTIONAL LOANS

Conventional loans used to finance the purchase of single family residences, and 1 to 4 family dwelling units, are known as conforming loans. A conforming loan conforms to FNMA (Federal National Mortgage Association), also known as Fannie Mae, or FHLMC (Federal Home Loan Mortgage Corporation), also known as Freddie Mac, guidelines. Typically, FNMA guidelines are consistent with FHLMC guidelines. FNMA/FHLMC do not originate loans, but establish guidelines for loans they purchase on the secondary market. FNMA/FHLMC loans that exceed of 80% LTV (Loan to Value) require PMI (Private Mortgage Insurance).

FNMA/FHLMC loans have specific 33/41% Debt to Income ratios.
FNMA/FHLMC loans that exceed 80% LTV (Loan to Value) require PMI (Private Mortgage Insurance). The use of this insurance (PMI) allows Mortgage Bankers like us to make loans with as little as a 3% down payment.

FNMA/FHLMC loans may be for a term of 15 or 30 years, may have 3, 5, 7 or 10 year balloon payments, and at a fixed, adjustable, or graduated rate of interest.

FNMA/FHLMC owner occupied loans may have a Loan to Value (LTV) of up to 97%. At least a 3% down payment is required. The mortgage loan amount is calculated using the purchase price. In order be able to utilize a FNMA/FHLMC owner occupied loan, the property must be occupied by the primary borrower.

FNMA/FHLMC non-owner occupied loans may have a Loan to Value (LTV) of up to 80%. At least a 20% down payment is required. The mortgage loan amount is calculated using the purchase price.

On properties using FNMA/FHLMC financing, any money you will need for the down payment, closing costs, and to establish an impound account may have been saved by you, it can be a loan against your retirement account, or it can be any combination.

FNMA/FHLMC loan payments are calculated monthly to include a portion of the property taxes, homeowner's insurance, private mortgage insurance, and homeowner's association dues (if applicable). These additional monies are called impounds or Pre-Paids.

The property used for a FNMA/FHLMC loan must have direct access to a paved or all weather surface road.

The property for a FNMA/FHLMC loan must have dependable water and waste systems approved by a FNMA/FHLMC approved appraiser, and state authorities.

The property for a FNMA/FHLMC loan must show an adequacy of electrical, plumbing, heating, air conditioning, energy efficiency, sewage disposal, and water supply. This must be certified by a FNMA/FHLMC approved appraiser, and a state licensed termite inspector.

The Seller of the property using an FNMA/FHLMC loan may contribute up to 3% of the purchase price towards your Closing costs and/or Pre-Paid expenses for properties purchased at 97% LTV. The Seller may contribute up to 6% for properties purchased at 90% LTV or greater.

Since most Conventional loans require Private Mortgage Insurance, we have included these last few paragraphs so that you will better understand it's need and purpose.

Private mortgage insurance is insurance written by a private company protecting the mortgage lender against financial loss caused by a borrower's default. If the borrower stops paying the mortgage because of unemployment, credit problems or other difficulties, and the loan is insured by a private company, a top percentage of the loan may be covered by insurance, thereby reducing the the mortgage lender's loss. In order to enable borrowers to purchase a home with a smaller than 20% down payment, a mortgage lender must minimize the risk of borrower default. Private mortgage insurers insure this risk, and therefore help offer conventional mortgages with as little as a 5% down payment. Private mortgage insurance companies play the same role in conventional mortgage lending as the Federal Home Administration (FHA), the Veterans' Administration (VA) and Farmers Home Mortgage Administration (FHMA), so that the mortgage lender is protected against losses in the event of a foreclosure.

Besides our standard loan programs, we also have a large number of unique programs to serve your needs:
" Purchase a house with 0 down
" Piggyback loans 80-10-10 or 80-15-5. No PMI payments even with 5% or 10% down.
" Debt consolidation programs
" Home Improvement loans
" Qualify even if you may have been turned down before!