Low-Cost Mortgages That Save You Time, Money & Headaches

The home of your dreams is within your reach. We can help you select the best way to purchase a property that meets your needs while staying within your budget.

Your financing options may include the following types of loan programs: Conventional, First-time Buyer, Jumbo (non-conforming), Govement Loans (VA, USDA, FHA), Interest Only, Asset Depletion, Cashflow Self-Employed, Adjustable and Fixed Rate loans.

When researching the best loan options for your financial situation and lifestyle, you’ll need to consider several factors, including how many years you plan to stay in the home, tax benefits, risk tolerance, and alternative uses for your money. Use this chart to determine what loan program you might qualify for.

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Refinancing

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Should You Get A Fixed Rate Or Adjustable Rate (ARM) Mortgage?

Regardless of the type of mortgage that you select, usually you will have the option to also select a fixed or adjustable rate mortgage.

All of the types of loan programs listed on this page offer fixed and adjustable rate options.

Fixed Rate Mortgage

The fixed-rate mortgage is one of the top picks for all homebuyers. The rate, monthly principal, and interest payments don't change during the life of the loan.

You can select a fixed rate loan where the loan is paid off in 30, 25, 20,15, or 10 years. Sometimes, we can customize the length of the loan to a specific number of years, like a 23 year loan. Rates are usually a little lower for the shorter term loans.


Adjust Rate Mortgage (ARM)

With an ARM, your initial rate is fixed for a period of time — usually either 1, 3, 5, 7 or 10 years. Every ARM loan has three components (Index, Margin, and Adjustment Caps) that determine how and when the rate will adjust over time.

After the initial fixed period, the rate can adjust up or down by adding the current index value plus the margin (a fixed percentage). The amount that the rate can adjust each time is determined by the interest rate caps.

Common indices include LIBOR, Prime, and Treasuries. The amount that the rate can adjust each time is determined by the interest rate caps.

What you need to consider: If fixed rates are at historically low levels and you plan on keeping this property for the long term, a fixed rate may be your best option. If there is a significant advantage (lower rate) to selecting an ARM, it may be beneficial to use the cash flow savings to either afford a nicer home or build equity by paying down the mortgage with the extra saving compared to a fixed rate.


Loan Types

Conventional loans conform to the lending guidelines established by Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac).

Fannie Mae and Freddie Mac have similar guidelines and requirements; however, sometimes one program will have a feature that will make it either easier for you to qualify or require fewer documents to complete the loan process. As part of your pre-approval process, we will determine which program will best meet your needs.

What you need to know: Conventional loans offer down payments as low as 3%. First-time buyers also qualify for lower mortgage insurance rates with Fannie Mae’s HomeReady and Freddie Mac’s Home Possible programs.

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FHA Loans

FHA home loans are mortgages insured by the Federal Housing Administration. These loans allow buyers to get low mortgage rates with only a 3.5% down payment.

Low credit score? You can qualify for an FHA loan with a Credit Score as low at 580 with only a 3.5% down payment. FHA also allows you to have a higher debt-to-income ratio, which improves your chances of qualifying for the loan.

What you need to know: You can qualify for an FHA loan two years after bankruptcy or three years after a short sale or foreclosure. There is only a one year waiting period after these events if the cause was due to medical reasons or the death of a spouse.

Veterans (VA) Loans

VA Guaranteed Loans are made by private lenders to eligible active duty and veteran members of the military to purchase or refinance a home. It is important to note that the Department of Veteran Affairs (VA) is not a lender. The VA does not lend money or service loans. The VA  guarantee protects the lender against loss if the veteran fails to repay the loan.

These loans offer exceptional benefits such as low-interest rates, no down payment, and no mortgage insurance.

What you need to know: You can use your VA eligibility more than once and have more than one VA loan at the same time, depending on the size of the loan and other factors.  Our Certified Veteran Loan Specialist will be happy to help you determine how best to use your VA home loan benefit.

USDA

The USDA home loan is a great no down payment mortgage program issued through the USDA Rural Development Guaranteed Housing Loan Program. It offers low-interest rates and low annual guarantee fees (like mortgage insurance).

The property must be located in an eligible rural or suburban area. Go HERE to determine if the property is eligible for this program).

There are also income restrictions based on the size of your family and the location of the home. Go HERE to determine if your household’s income meet USDA’s requirements.

What you need to know: Though this program sounds like it is just for rural areas, there are several suburban areas that qualify for this no down payment program.

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Loans that don’t conform to Fannie Mae or Freddie Mac’s guidelines or that exceed their loan limits are considered non-conforming or jumbo loans.

Many times these loan programs will have additional requirements for a loan approval such as requiring a higher minimum credit score, verifying more assets in reserve after closing, or limiting the debt-to-income ratio allowed for approval.

What you need to know:  Non-conforming loans are often used for higher priced homes but at times can be a better fit for a client who could also qualify for a conventional loan.

With interest-only mortgages, you can make monthly payments solely toward the interest accruing on the loan for a period of time. These loans don’t conform to Fannie Mae or Freddie Mac guidelines and usually require that you have significant assets in reserve and high credit scores.

What you need to know: Paying interest only for a period of time may enable you to pay off higher interest debt faster or use the cash flow savings for investing.

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Loan programs are available for clients who either have a large number of assets without consistently receiving income or self-employed clients who can show consistent cash flow through their business and/or personal bank accounts but don’t show much net income on tax returns.

What you need to know: Lenders want to make sure that you can repay the loan over time; they don’t want your property. These types of programs enable lenders to see that clients have the means or cash flow to be able to repay the loan in a timely manner.

It may make sense for you to consider refinancing your home loan if:

  • Rates are lower than your current loan
  • You want to move from an adjustable to a fixed rate loan
  • You want to consolidate debt and improve your overall cash flow
  • You want to access your equity to improve your home
  • You want to move to a lower adjustable rate to improve your cash flow

What you need to know: We can help you compare financing options and determine the lowest cost way for you to achieve your goals.

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What Kind Of Mortgage Is Right For Me?

Overwhelmed by all the choices? Choosing the right financing option can be intimidating and impact the total cost you pay for your home over time.

Fortunately, you don’t have to do it on your own. An experienced lender can guide you through the process and help you select the right loan for your financial situation and home buying goals.

Ready to get started? Schedule a call, and we will help you develop the foundation for financial success and avoid costly mistakes.

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