MORTGAGE OPTIONS

There are many ways to finance your first or next home. From fixed interest loans to adjustable rate mortgage loans, the mortgage options available to homeowners are vast. To simplify your mortgage search, we will help you assess your financial needs and goals to help you save money and live comfortably. Take a look at our mortgage programs to get an idea of the best mortgage options for you before beginning the mortgage application process.

CONVENTIONAL LOAN

A conventional mortgage loan that has the same interest rate and mortgage payment for a specific period, offering payment and housing market stability.

Are you looking to stay in your home for multiple years at the same, minimal price? If so, a conventional loan may be the best choice for you. Because a conventional loan has the same monthly payments, it’s one of the more popular mortgage products on the market.

A conventional loan can be a great option for homeowners who plan to lock in a lower interest payment while rates are down and are open to refinancing in the future.

With a conventional loan, your monthly payments and interest rates will never change over the life of the loan, giving you financial stability when faced with fluctuating housing rates. A conventional loan offers:

  • 100% payment certainty
  • Easy budgeting
  • Housing market stability
The maximum loan amount for a conventional loan varies by county so it’s important to work with a mortgage professional to help determine if this loan is your best option. Gift funds are allowed on primary and secondary residences, but homebuyers must have 5% of their own funds unless the gift amount covers at least a 20% down payment.

Private mortgage insurance is required on all loans with less than 20% down.

FHA LOAN

An FHA loan is a type of mortgage that is insured by the Federal Housing Association of the U.S. Department of Housing and Urban Development (HUD). FHA loans have lower down payment requirements and protect lenders from default losses.

If you are looking to buy a home, but worry that your low credit rating or debt to income ratio may stand in the way, you may be eligible for an FHA loan. Although there are still limits to how much you can borrow, there are no income requirements, and FHA loans require a lower down payment.   Since 1934, FHA loans have made it easier for all types of people, first-time homeowners and senior citizens to own homes and foster the economy. As part of the U.S. Department of Housing and Urban Development, an FHA loan helps improve housing standards, stabilizes the mortgage market and protects private lenders from default losses.
Unlike mortgage loans, an FHA loan is a type of mortgage insurance provided by the Federal Housing Administration (FHA), which offers to pay off the loan if the borrower defaults. This makes lenders more likely to disperse larger mortgage loans. An FHA loan offers:

  • Down payments as low as 3.5% of the asking price
  • Closing costs included in the loan
  • The ability to add home repair costs to the loan for remodeling
  • Insured financing for modular and manufactured homes
Annual and up-front mortgage insurance premiums are required for an FHA loan, and maximum loan amounts vary by state and county. The insurance premiums paid by each borrower will be used to reimburse the lender (not the borrower) should the borrower default on the loan and the lender forecloses the home. Homebuyer education courses or minimum credit score requirements may apply. Down payment assistance may or may not be available in your area.

VA FINANCING

A VA loan is a guaranteed mortgage loan supported by the U.S. Department of Veteran Affairs that allows veterans to obtain home mortgages without a down payment. The VA determines the eligibility and insurance for the loan, while a private lender disburses the loan.

VA loan is a guaranteed mortgage loan supported by the U.S. Department of Veteran Affairs that allows veterans to obtain home mortgages without a down payment. The VA determines the eligibility and insurance for the loan, while a private lender disburses the loan.
The VA loan is provided by the U.S. Department of Veterans Affairs to guarantee eligible veterans, or their surviving spouses, long-term mortgage financing for their primary homes. A VA loan also guarantees insurance if the loan defaults. A VA loan offers:

  • No maximum loan amounts
  • No early pay-off penalty
  • No down payment necessary
  • No private mortgage insurance
Funding fees can be financed in a VA loan. Only primary residences qualify for this mortgage program, and homeowners must certify their intent to occupy the primary residence within 60 days. A spouse may satisfy occupancy if the Veteran is on active duty or is unable to occupy the residence due to distance employment. Surviving spouses are eligible for a VA loan, provided that they do not remarry. The VA limits the amount charged for closing costs.

USDA LOAN

One of the best parts about the USDA mortgage program is that USDA loans require absolutely no down payment.

With USDA mortgages, you can actually purchase and move into the home of your dreams with little to no money upfront. The only major upfront costs associated with USDA mortgages are appraisal and home inspection costs, and closing costs, which in most cases can be financed into the overall amount of the home. USDA mortgages are specifically created for middle to low income families who can’t afford the tens of thousands of dollars needed as a down payment from most traditional financing.
In order to get approved for a USDA home loan you must first meet certain property eligibility guidelines. First of all, USDA home loans are only eligible in USDA approved rural areas. USDA approved rural areas consist of any property that is rural in nature. Because USDA mortgages are specifically created for middle to lower income households, there are specific income restrictions in place to ensure these loans are being used correctly.A USDA loan offers:

  • Zero down payment
  • Minimum credit score requirements
  • USDA eligibility based on location
A USDA loan (also called a Rural Development Loan) is a government insured home loan that allows you purchase a home with NO Money Down. USDA Home Loans offer 100% financing to qualified buyers, and allow for all closing costs to be either paid for by the seller or financed into the loan. USDA offers some the lowest rates of any loan, and you will always have a fixed interest rate.

ADJUSTABLE RATE MORTGAGE

An adjustable rate mortgage (ARM) is a conventional loan whose interest rate changes after a certain number of years, and often has lower monthly payments than fixed mortgages.

Even though the interest rate varies with an adjustable rate mortgage, which can cause your monthly payments to change as well, there is a possibility that you could still end up with a lower monthly payment. Because of the risk associated with an adjustable rate mortgage, lenders often reward homeowners a lower interest rate.   Other safeguards provided for adjustable rate mortgages include interest and payment caps to prevent your monthly payments from increasing dramatically. Additionally, the interest rate of an adjustable rate mortgage changes only after a certain number of years. Depending on the rate at the specified time, the interest and payment of an adjustable rate mortgage will change after a year with a 1-year ARM, after three years with a 3-year ARM and so on.
With an adjustable rate mortgage, interest rates remain fixed for 1-10 years and periodically adjust after the fixed period. Depending on the initial adjustment period, an adjustable rate mortgage can have a lower interest rate than a 15-year fixed mortgage. An adjustable rate mortgage offers:

  • Lower monthly payments initially than fixed mortgages
  • The ability to cover rising mortgage payments with increased income
  • Loan payments recalculated if principal grows beyond a set limit
  • Flexibility to sell your home or refinance if interest rates rise
The maximum loan amount for an adjustable rate mortgage often varies. Private mortgage insurance is required on all loans with less than 20% down.

REFINANCE LOAN

If you are looking to lower your monthly payments and interest rates or consolidate your mortgage debt, refinancing your home is the best option. Refinance loans are used after an increase in market value once a home is purchased.

A change in mortgage rates and how long you plan to stay in your current home are the most important things to consider when deciding to refinance. Refinance loans are often used to transition from an adjustable rate mortgage to a fixed rate mortgage or lock in a lower interest rate for lower monthly payments. Typically, homeowners refinance if interest rates become at least two points lower than their existing rate. Refinance loans include upfront costs similar to those required for original mortgages, so if the home is sold in five years or less, you could lose out on any potential savings.
Refinance loans can reduce your overall financial benefit by restructuring your debt, which lowers your interest payments. Refinance loans offer:

  • Adjusted payments to current market standards
  • The option to extend or keep the same loan term
  • Ability to transfer debt to mortgage loan
  • Lower closing costs and interest expenses
Homeowners with at least 5% home equity built through a conventional loan or at least 2.5% built with an FHA loan are eligible for refinance loans. You must also be up to date with your current mortgage payments to qualify. If you do not have the required home equity, but are current on your mortgage payments for the last six months, you may be eligible to refinance through the federal government’s Home Affordable Refinance Program (HARP).

JUMBO MORTGAGE

A jumbo mortgage is a mortgage loan that may have high credit quality, but is in an amount above conventional conforming loan limits imposed by Fannie Mae and Freddie Mac, the two government-sponsored enterprises that buy mortgages from lenders.

While the underwriting process for jumbo mortgages is similar to that of a conforming mortgage, the requirements differ.
  • Can have multi-million dollar loan
  • Typically lower interest rates
  • Tax deductible interest on loan, can be up to $1 million
  • No private mortgage insurance requirements
Jumbo borrowers need at least six months’ worth of reserves in their bank accounts after closing, while conforming loan borrowers may be required to have just one or two months’ worth of mortgage payments set aside. The required reserve amount for jumbo borrowers can sometimes be 20% percent of the loan.

DOWN PAYMENT ASSISTANCE

As a potential first time home buyer, you know the sacrifices made to save sufficient money to make a down payment on a home. For some, it seems impossible to even begin to save enough cash without some form of down payment assistance help.