Loan Programs
There are a number of loan programs available to meet your needs.
- Conventional Loans
- FHA Loans
- 203K FHA Loans
- VA Loans
- No Income Verification Loans
- Jumbo Loans
- High Debt Ratio Loans
- Construction Loans
- Flex 97 Loans
- Equity Loans
- No Down Payment
Conventional Loans
Traditional loan programs that usually require 5% down and offer competitive interest rates. Documentation and fair to good credit are necessary. These are loans up to $417,000.00.
FHA Loans
Backed by the Department of Housing and Urban Development this mortgage offers the borrower the ability to put as little a 3% down payment and they can even finance “allowable” closing costs. Seller can contribute up to 6% of the purchase price to the buyer towards closing costs.
203K FHA Loans
Same as FHA above but with the ability to finance home improvements that are needed. One mortgage is given based on the value plus improvements up to 115% of the future value. These improvements must be over $5000 and can be for a new kitchen, new bathroom, to add a garage or to structurally improve the property. They cannot be to add a swimming pool etc…
VA Loans
Backed by the Veterans Administration and the federal government it is similar to FHA except that you have to be a qualified Veteran or military personnel.
No Income Verification Loans
Loans where your income is not requested or verified with as little as 10% down are stated income loans. There are several varieties of the "no-doc" loan today. Basically the type of loan that is best suited for a particular borrower depends on that borrower's situation. Some borrowers choose not to disclose employment, income or asset information, while others may be willing to disclose employment and asset information but not income. Still others might be willing to disclose even income but select a program that doesn't calculate debt-to-income ratios allowing those borrowers to exceed the traditional guidelines in order to qualify for a larger mortgage amount. With all the different variations of the no-doc loan, there is definitely a mortgage program for today's non-conventional borrowers.
Jumbo Loans
Offers 30 and 15 year fixed rate mortgage and competitive ARM products with full document, alternate documentation and limited documentation.
Cash out and No cash out refinance are allowable. Single family detached, Condo's, PUD's and single-family second homes can be financed with no prepayment penalty. These loans are over $417,000.00.
High Debt Ratio Loans
Borrowers having the ratio of their monthly bills to their monthly income higher than 50% is considered a high debt ratio. Loan programs are available for these borrowers, allowing them to finance the purchase of a home or property.
Construction Loans
Same as FHA above but with the ability to finance home improvements that are needed. One mortgage is given based on the value plus improvements up to 115% of the future value. These improvements must be over $5000 and can be for a new kitchen, new bathroom, to add a garage or to structurally improve the property. They cannot be to add a swimming pool etc…
Flex 97 Loans
Same as FHA above but with the ability to finance home improvements that are needed. One mortgage is given based on the value plus improvements up to 115% of the future value. These improvements must be over $5000 and can be for a new kitchen, new bathroom, to add a garage or to structurally improve the property. They cannot be to add a swimming pool etc…
Equity Loans
Equity loans are loans that follow a first mortgage on your property. So in essence, they are a 2nd mortgage, or even could be a 3rd mortgage. They are known by different names in different parts of the country. They are known as 2nd mortgages, FLOC-fixed line of credit, HELOC-home equity line of credit, ALOC-adjustable line of credit, equity lines, or even debt consolidation loans. No matter what the name, be assured that it is a mortgage and a lien against your property.
Qualifying for these loans is much harder than a first mortgage. The loan to value or LTV, is normally capped at 90% of the appraised value. Credit scores need to normally be above 660 as well. The credit score guideline can be lower if you are borrowing less than 80% of the value, but will be an underwriter’s ultimate decision based on all factors. Your ability to repay the loan (income) and past history on your 1st mortgage and installment loans such as automobile or boat loans, are the main factors on weather you get approved or not. The thought is if you can’t pay your first mortgage on time, you won’t be able to pay this one on time. History shows us that if one of the mortgages is going to be late, we will almost always choose to be on time with the first mortgage and let the 2nd one be late. Please be advised, whether late on the first or second mortgage, most underwriters consider any mortgage late to be equally harming to the decision.
When it is a closed end equity loan, the amount of the loan is a fixed amount. This means that you can’t borrow any more than you already have. The term is a finite term, the payment is the same every month and the loan will end at a specific date, unless paid off early and ahead of the amortization schedule. In the eastern United States we normally use the HELOC or home equity line of credit. This is a 2nd lien or credit line that has a maximum loan amount you may borrow up to. You have the ability to pay it down and then borrow up again therefore giving it the characteristics of a “line of credit.” The rate is adjustable and follows the Federal Funds Rate or the “overnight” rate that the Federal Reserve charges banks and lending institutions for borrowing funds. The interest that is charged is based on the ADB or “average daily balance” during the month. Therefore, if your high balance was $10 and the low balance was $6, the avg. daily balance would be $8 and that is what the interest would be calculated on. This allows you to budget or actually manipulate the account to pay less interest based on the ADB.
Equity lines are a great way to pay off debt, reduce your overall principle owed on the first mortgage, help to become an investor in real estate, or to become “Mortgage Rich”. As always, please consult a mortgage professional for help and advice.
No Down Payment
0% Down payment required and closing costs paid by the borrower (seller can contribute up to 6% towards closing costs).
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