Loan Programs

We offer the most complete line of mortgage choices available, providing you with the home financing options that make sense for your budget and lifestyle. Our goal is to be able to provide the best mortgage for every buyer. Whether you're buying a home, refinancing or needing a home equity loan, I can find the right product for you. Our full-service mortgage bank, plus our ability to broker through other lenders, gives me the options to provide you with hundreds of programs to choose from:

· Purchase
· Refinance
· Community home buyer program
· 3% FHA loan program
· VA Loan Program
· Jumbo Loans
· 100% Financing
· Home Equity Loans
· Bankruptcies
· No cost loans available

 

Choosing the Right Loan

Whether you're borrowing to buy a home or refinancing, the mortgage you choose must be compatible with your budget, your appetite for risk and your financial goals. Here, we will discuss the types of loans that, when matched with your own financial needs, will help you determine what type of loan is best for you.

There are two general categories of loans: fixed rate or adjustable rate mortgages (ARMs). Fixed-rate loans means that the initial interest rate the lender quotes lasts for the length of the entire loan. It ensures your mortgage payment is the same every month, and that your interest rate will not change. On an ARM, the interest rate adjusts according to a predetermined schedule: every year, for instance.

The 30-year Fixed

The 30-year fixed loan, increasingly popular with the current low interest rates, is the basic lending model. It's the overwhelming favorite any time interest rates are low because it gives borrowers the security of knowing they can enjoy a relatively low interest rate for the next 30 years.

However, most people who take out a 30-year fixed loan don't keep it that long, even if they don't sell their house and pay off the mortgage. Home owners will quickly rid themselves of their old 30-year fixed for a new loan, refinancing any time rates get lower than their current loan. Even though it can cost several hundred dollars to refinance, many borrowers will do so in order to lower monthly payments. No-cost refinancing is also available, but borrowers then pay a slightly higher interest rate. If you already have a relatively low-interest rate fixed loan, there can be good reason not to refinance.

Experts say that homeowners sitting on fixed loans at 8 percent or less may choose not to refinance. Every time you refinance to a 30 year fixed, you start over. You start at payment number one of 360, lengthening the time you will live with a mortgage payment.

Short-term loans

There are many people who want to carry little or no debt at any cost. As such, there are shorter term fixed-rate loans: 15-year, 20-year and, in some cases, 25-year loans. With shorter term loans, you end up paying more principal every month, thus paying off the loan faster with less interest charges over the life of the loan. Typically, middle aged home buyers opt for shorter term loans to be free of mortgage payments by the time they retire. Payments on 15-year loans are about one-third larger that the standard 30 year fixed. Some borrowers take out 20-year loans, as a solution offering faster payback with more affordable payments. Even though short term loans save you thousands in interest charges, that savings might not be worth if you could put your money in high-yield investments. However, this is the situation where you need to know yourself and determine if that is the type of gamble you would like to take.

Adjustable-rate loans

If you are not risk-averse, an ARMs can save you money. Some of the most popular ARMs now are the three- and five-year ARMs. This means the rate stays fixed for three years or five, and then will adjust every year after that. Lenders may be able to capture a higher interest rate when the ARM begins to adjust, so they are willing to give you a slightly discounted interest rate during the initial period.

People who need mortgages over $240,000 often look the hardest at ARMs. Borrowers who seek jumbo loans must pay a slightly higher rate on 30-year fixed loans than standard borrowers, therefore these customers can save even more by taking out an ARM. The shorter the initial fixed-rate term on an ARM, the lower the rate. A loan that will adjust after one year carries the lowest initial rate of all.

If you know that you are going to be selling your home within a year, this ARM may be for you. Or choose an ARM if you think you can refinance to a fixed-rate loan if interest rates look like they are going up. It's a strategy that could work for you if you can tolerate the risk.

 

What You'll Need

The lender may ask for these, and possibly other, documents:

· Two most recent paycheck stubs if paid every 2 weeks or
      twice a month.
· Four most recent paycheck stubs if paid every week.
· Two years of W-2 tax forms.
· Two years of personal tax returns with W2's if using
      commission, bonus, interest or other variable income.
· Two years of personal, partnership, and/or corporate tax
      returns if self employed.
· Three most recent bank and asset statements with
      all pages for allbank accounts, investments, or
      retirement accounts.
· One year of canceled rent checks.
· Real Estate purchase contract, signed by all parties.
· Application fee.
· Copy of earnest money deposit check.
· Payment books and/or statements for outstanding liabilities.
· Certificate of Eligibility for VA loans.
· Bankruptcy: Provide copy of discharge papers, list of
      creditors, and letter of explanation surrounding
      circumstances.
· Credit explanation letter for all slow payments.
· Complete divorce decree and/or separation papers.

 

The Mortgage Process

Owning a home helps solidify your financial future by increasing your savings and building your net worth. Unlike rent payments, a portion of your mortgage payment builds equity or ownership in your home. Your home equity can help you qualify for other loans, such as student, auto, second home, and even small business loans. Also, mortgage interest payments are tax deductible. In many cases, this will take you above the minimum itemized deductible, allowing you to write off other items, such as charitable contributions. Not only can you deduct the interest on your home mortgage, but you can avoid taxes on the profit from selling your home if you buy another home of equal or greater value within two years of the sale.

How to Get Ready

Clean your credit history.
Lenders want borrowers who have no negative items on their credit report: no defaults, no late payments, no bankruptcies. You might think you have great credit, but nearly 25% of credit reports have errors in them. It is important that you find it first, before the lender does, by getting a copy of your report from a major credit bureau such as Experian, Trans Union or Equifax. (Note: these links will open a new browser window.) Look for mistakes, such as accounts that are not yours. Contact the creditor by phone or mail and ask them to correct the report. You should then get another copy of the report 30 to 60 days later to ensure corrections have been made.

Trim credit card accounts and balances.
Lenders look at how much debt you have and what your potential is for future debt. Aim for few cards with low balances. That's especially true if you have other debts such as a car loan. Don't pay down or pay off balances with cash intended for a down payment.

Close all dormant credit card accounts.
Contact card issuers and ask for instructions on closing the accounts. You may be asked to cut up your card and return it by mail. In any event, you should instruct the card issuer in writing to enter into your credit report "Closed at request of cardholder." That way, the mortgage lender will have no reason to suspect that a credit problem caused the account to be closed.

Solidify your savings.
Lenders will ask for back copies of your bank accounts to see that you have enough cash for down payment.

Get pre-approved.
Buyers with a mortgage pre-approval have a distinct advantage when they are ready to deal. An approved mortgage establishes a shopper's buying power. To speed the process and strengthen their bidding position, many home shoppers check their credit report and get pre-approved for a mortgage before looking for a house.

The Importance of Getting Pre-Approved
The importance of getting pre-approved cannot be stressed enough. Once you find your dream home, actually purchasing it can be extremely difficult when another buyer is there with cash in hand and you haven't even started to line up financing. Pre-approval is especially important in a booming real estate market, where there can often be multiple offers on one property. If the seller knows that you've been pre-approved, they know that you will be able to come up with the cash to close. In the pre-approval process, the lender will review your credit, determine whether you have adequate cash for down payment and closing expenses, and will verify the amount of income you generate each month. Getting pre-approval on a loan can take from 2 days to a week. Pre-approval will also speed up the entire mortgage procedure once you've found the house you want. After pre-approval, the only remaining question will be whether the house will "appraise" an amount enough to warrant the loan. Once you are pre-approved, you can start house shopping in the price range right for you.

Down Payment Strategies
If you're like most people, your home will be the single largest investment you'll ever make. Along with financing, you will need a down payment. Although some alternate means of financing, like FHA or FNMA require only three percent down payment, five percent is the minimum down payment for most loans. The bigger your initial down payment, the smaller your loan, which reduces the amount of your monthly payments. How much you'll put down depends on the cash you have and the amounts you'll need for closing costs, prepaid property taxes, and homeowners' insurance. If you put less than 20% down on most loans, you'll be asked to protect the lender by carrying private mortgage insurance (PMI). Carrying PMI ensures that the debt is repaid if you default on the loan. This adds approximately an extra half a percent onto the loan. FHA mortgages, in return for their low-down-payment requirements, also charge for mortgage insurance premiums (MIP).

Coming up with the Cash
Typically people will look to liquidate these types of asset accounts in order to come up with a down payment.

Bank Accounts Whether checking or savings, your bank accounts don't earn that much interest and they are easy to cash out.

Investment Accounts Stocks, bonds, and mutual funds accounts are easy to liquidate, but you may want to hold on to any accounts you feel will appreciate in value at a rate higher than your mortgage.

Retirement Accounts When you are buying a new home, your retirement account may allow you to borrow against it. However, you'll have more debt, thus decreasing the amount you can borrow. There is also a new retirement account option, the Roth IRA, which allows a one-time, no penalty withdrawal of up to $10,000 for first-time home buyers.

Real Estate If you already own a home as a primary residence, you'll probably sell it when purchasing a new home. This is the most obvious source of down payment funds. One word of caution: There are many benefits to having a mortgage. Interest is tax deductible. This means the net interest rate on a mortgage is actually lower than the stated rate. Because of this, a mortgage is considered by many to be a "cheap" source of money. You can take money you would have otherwise spent on a down payment to do other things. It's not always wise to put down the largest down payment you can afford. Many times twenty percent is a good amount to put down, and use your excess cash for other purposes. A mortgage is pretty much the cheapest loan you will ever have.

Think you're ready to get started? Apply today and get ready to purchase the home of your dreams.