Loan Programs

Cash Out Refinance

Cash-out refinances are viewed to have an added risk factor compared to rate & term refinances or purchases attributed to the increase in the loan amount based on the value of the property.

Advantages:
  • A lump sum of money at closing for use based on program requirements.
  • Typically interest rates are lower on cash out refinance loans compared to home equity loans.
  • Tax benefit if proceeds of loan are used to pay off debt which interest is not tax deductible.
  • Easier qualification standards as existing equity is being leveraged.

GOVERNMENT

FHA Loans

The Federal Housing Administration was established in 1934 to help increase home sales during The Great Depression. In current times the FHA's role is to financially backs home loans to mitigate much of the risk of non-payment and foreclosure from private lenders. It is pertinent to note that the FHA is NOT a lender, but a governement entity created to guarantee your loan.

Advantages:
  • Lower interest rates.
  • Smaller down payment.
  • Lower closing cost requirements.
  • Less restrictive credit requirements.
  • Lower mortgage points.
  • Bankruptcy doe not automatically disqualify potential borrowers.
  • Resale can be made quicker.
  • Backed by the federal government of USA.
Program Features:
  • Down payment required.
  • Loan amounts are limited and lower than conventional.
  • MIP (Mortgage Insurance Premium) is required regardless of LTV (loan-to-value).
  • Higher MIP (Mortgage Insurance Premium) than on conventional loans.

VA Loans

A VA loan is a residential mortgage loan that is guaranteed by the Veterans Administration. Established in 1944 by the US, VA loans provide veterans and/or their surviving spouses with a governement guaranteed home loan with NO down payment. This program, also known as the GI Bill, has been instrumental in assisting millions of American Veterans and their families qualify for lower cost home loans.

Advantages:
  • No down payment.
  • No private MIP (Mortgage Insurance Premium) requirement.
  • Limits placed on origination fees to ensure lower costs.
  • Limits placed for closing costs a lender may charge.
  • Limit placed on amount that can be charged for appraisal fees.
Program Features:
  • Borrower must have a Certificate of Eligibility from the VA.
  • Typically longer processing time.
  • Borrowers are required to make a one-time funding fee based on loan amount and borrower's service length.

USDA Rural Loans

The USDA Rural Housing Service has various programs to offer assistance to low-to-moderate income rural residents for purchase, construction, repair, or relocation of a dwelling and related facilities. USDA rural housing loan programs allow qualified home-buyers to get loans with minimal closing costs and no down payment.

Advantages:
  • No Down Payment requirement.
  • Property must be located in an eligible rural area (moved up from disadvantages)
  • Closing Cost can be added into the loan (if the property appraises high enough to include it at up to 102% of the appraised value).
  • Low interest rates.
  • Includes first time home-buyers.
  • May include repeat home-buyers.
  • Loan government guarantee fee and not monthly guarantee fee.
  • Applicants may have a wider array of credit profiles.
  • Income eligible applicants may qualify even if they do not qualify for conventional financing.
  • Families and individuals that have minimal funds for a down payment and closing costs benefit from lower costs.
  • Seller concessions - 6% max.
  • 30 year loan at a competitive fixed rate.
  • No non-allowable costs protections.
  • No first time home-buyer requirement.
  • No limitation on gift funds.
  • No cash reserve requirement.
Program Features:
  • Property must be in very good condition and have a high insulation R-factor.
  • Must be able to verify income limits.
  • Can not make over 50% of 115% of the median county income to qualify.

Purchase

The process of acquiring a property for the purpose of primary residence, 2nd home, or investment property.

Advantages:
  • Secured investment.
  • Builds equity.
  • Establishes credit history.
  • All interest on the mortgage is tax deductible.
  • Purchased property can be borrowed against.

Rate term

The process of paying off one loan with the proceeds from a new loan, using the same property as security. The purpose is to reduce the interest rate, payment, and/or overall term of the mortgage. Cash received by the borrower at closing may not exceed $2,000 (not allowable in Texas). Requirements vary depending upon State's Law.

Advantages:
  • Reduce interest rate, payment, and/or overall term of the mortgage.
  • Limit of $2,000 cash (varies depending upon State's Law where loan is originated).

Traditional

Conventional Loans

Conventional loans are any type of creditor agreement that are not financed by the Federal Housing Administration or backed by the Veterans Administration. In most instances, conventional loans are protected by the government sponsored entities: Fannie Mae (FNMA) and Freddie Mac (FHLMC).

There are different types of conventional loans all of which have their own requirements. Conforming and non-conforming conventional loans are the most common subsets. Conforming loans have to meet the guidelines set by Fannie Mae and Freddie Mac. These loan amounts are not to exceed the maximum loan limit set by Fannie Mae and Freddie Mac.

Advantages:
  • Creditors are free to add or eliminate certain fees on loans.
  • Creditors can keep the loan in their portfolios in order to provide more flexibility concerning the management of loans.
  • Applicants who are willing to get a loan, but do not meet certain established guidelines or criteria may or may not be approved by a creditor, who is willing to self-insure the loan. Typically in these instances the interest rate is increased to offset the risk the creditor incurs.

Jumbo

A jumbo is a loan where the amount borrowed is greater than the loan limits set by the institutions of Fannie Mae (FNMA) and Freddie Mac (FHLMC)

Advantages:
  • Possibility to finance a home that is over the maximum loan amount established by Fannie Mae and Freddie Mac guidelines.

DISCLOSURE ABOUT LOAN QUALIFICATION

Loan product availability is subject to approval based on loan amount and qualification of borrower. Not every applicant qualifies or is eligible for every loan program and some products may not be available in all states. Loan approval and rate are dependent on borrower credit, collateral, and financial history. All loan programs, terms, and rates are subject to change without notice.