Every borrower has different needs which is why it's important to get the right loan for you. At Amres we have a variety of loan products that are crafted to fit the goals of various clients. One of our loan officers will work with you to ensure you're getting the right one and that it's then crafted to fit your goals.
In order to promote home ownership, the Federal Housing Administration (FHA) offers FHA loans, which have been helping people become homeowners since 1934. With less stringent guidelines, lenders are able to issue loans on mortgages that wouldn’t normally fit conventional underwriting requirements, allowing more people to become homeowners.
Some benefits of FHA loans are:
- Low down payments
- Low closing costs
- Easy credit qualifying
What does FHA have for you?
Buying your first home?
FHA might be just what you need. Your down payment can be as low as 3.5% of the purchase price, and most of your closing costs and fees can be included in the loan. Available on 1-4 unit properties.
Want a fixer-upper?
FHA has a loan that allows you to buy a home, fix it up, and include all the costs in one loan. Or, if you own a home that you want to remodel or repair, you can refinance what you owe and add the cost of repairs – all in one loan.
Financial help for seniors
Are you 62 or older? Do you live in your home? Do you own it outright or have a low loan balance? If you can answer “yes” to all of these questions, then the FHA Reverse Mortgage might be right for you. It lets you convert a portion of your equity into cash.
Want to make your home more energy efficient?
You can include the costs of energy improvements in an FHA Energy-Efficient Mortgage.
How about manufactured housing and mobile homes?
Yes, FHA has financing for mobile homes and factory-built housing. There are two loan products – one for those who own the land that the home is on and another for mobile homes that are – or will be – located in mobile home parks.
More Info on FHA Loans
Unlike most loan programs, FHA does not have specific credit score requirements. Although a high credit score may assist in getting the mortgage approved, a low score is not automatically cause for denial. If the credit scores are low, then it is up to the borrower to demonstrate his/her ability and willingness to pay the loan back. This allows the borrower to explain the circumstances surrounding the credit difficulties and have that explanation considered in the underwriting process.
Because of FHA’s leniency, some borrowers with past credit problems elect to use FHA for loans when they have a substantial down payment rather than getting a higher interest rate conventional loan. FHA tends to be more flexible than Conventional financing in the money needed to purchase the home.
In an FHA mortgage the customer must put at least 3% of the sales price into the transaction. Some of this money may be used for down payment and the rest for closing costs . Keep in mind, however, that the total cost to close on an FHA is commonly over 3%. With the down payment, closing costs, money to establish escrows for taxes and insurance plus interest to finish out the month of closing, the total costs can be closer to 6 or 8% of the sales price.
The interest rate that you select will also have a bearing on the total costs. If you select a lower rate so that you can reduce your payment, you may end up paying additional money towards “points”. At the same time if you are comfortable with a slightly higher payment you may find a lender that is willing to reduce the costs to close in favor of a higher interest rate.
FHA allows the borrower to get the funds necessary to close from several sources. They include such areas as personal savings, gifts, grants, loans from retirement accounts and seller contributions.
**Amres Corporation is not affiliated with or acting on behalf of or at the direction of FHA, VA, USDA or the Federal Government.
Fixed Rate vs.
Whether you are purchasing or refinancing, the loan you choose will either be a fixed rate mortgage or an adjustable rate mortgage (ARM). A fixed rate mortgage is a loan in which the interest rate on the note remains the same throughout the length of the loan. Conversely, the interest rate of an ARM may fluctuate periodically to reflect market conditions. Each has its own benefits and drawbacks, and our mortgage professionals are here to determine which is right for you.
More Info on Fixed Rates
The main advantage of a fixed rate mortgage, as opposed to an ARM, is that the borrower will never have to pay more than the specified monthly payment – regardless of sudden and potentially significant rises in interest rates. Additionally, having a fixed rate allows borrowers to budget more easily.
Fixed rate mortgages can vary in duration; however, the two most common are 30-year mortgages and 15-year mortgages. Below are some considerations when deciding between the two.
- Higher monthly payments
- Pay significantly less interest over life of loan, building equity faster
- Generally lower interest rates with 15-year loan products
- Lower monthly payments
- Pay more interest over life of loan
- Generally higher interest rates with 30-year products
More Info on Adjustable Rates
The main advantage of an ARM is that it tends to give the borrower a lower interest rate initially than a fixed-rate mortgage. ARMs have an introductory interest rate that lasts a set period of time and adjusts annually thereafter for the remaining time period. The set rate for ARM loans can last for 3, 5, 7, and 10 years. For example, a 3-year ARM loan is a loan with a fixed rate for the first three years and then the rate changes once each year for the remaining life of the loan.
This type of loan is best for borrowers who plan to sell their home or refinance before the initial lock expires.
The details of a particular ARM, which is called the interest rate cap structure, tell you just how high your monthly payment could go. For example, a 5/1 ARM might have a cap structure of 2-2-6, meaning that in year six (after the introductory period expires) the interest rate can increase by 2%, in subsequent years the interest rate can increase by an additional 2%, and the total interest rate can never increase by more than 6%. Thus, if your introductory rate was 3.5%, your ARM would never adjust higher than 9.5%.
Unfortunately, the financial industry is forever fluctuating. Rates and payments have the potential to rise significantly over the life of the loan. ARMs can be risky if property values go down and borrowers can’t sell or refinance.
On certain ARMs, called negative amortization loans, borrowers can end up owing more money than they did at closing. That’s because the payments on these loans are set so low (to make the loans even more affordable) that they cover only part of the interest due. The remainder gets rolled into the principal balance
For a loan to be considered a “jumbo” mortgage, the loan amount must exceed conventional conforming loan limits, which are currently $625K in most areas of the country. It is important to note that jumbo mortgages can exceed these limits. The U.S. Housing Department has a useful tool on their website, where you can find limits in each state/county.
For further information on jumbo loans, please contact us. Our mortgage professionals will review your loan options and help you figure out whether a jumbo loan is right for you..
Formally known as a 203(k) Rehabilitation Mortgage.
Have you been thinking about adding a deck to your home or installing new windows? Do you have big dreams for that fixer-upper you’re considering purchasing?
If so, the Department of Housing and Urban Development (HUD) has a program that would allow you to get these home improvements done.
The Section 203(k) program is HUD’s primary program for the rehabilitation and repair of single-family properties. This program is sometimes referred to as a “renovation loan” or “rehabilitation loan.”
Section 203 (k) loans are available through FHA-approved lenders, meaning that this is not available through conventional financing. The program was created to promote and facilitate the restoration and preservation of the nation’s existing housing stock, as well as to help revitalize lower income communities.
What makes Rehabilitation loans different?
This type of loan is different from other models of financing, which typically involve supplying mortgages for properties that are up to code and provide adequate loan security. When rehabilitation is involved, a lender usually requires the improvements to be finished before a long-term mortgage is made.
Renovation loans allow homebuyers to purchase a house in need of repair or modernization, finance the reconstruction of the home, and obtain a permanent mortgage when the work is completed to pay off the interim loans with a permanent mortgage. Borrowers get one mortgage loan, at a long-term fixed (or adjustable) rate, to finance both the acquisition and the rehabilitation of the property.
Types of improvements that borrowers may make using Section 203(K)
- Structural alterations and reconstruction
- Modernization and improvements to the home’s function
- Elimination of health and safety hazards
- Changes that improve appearance and eliminate obsolescence
- Reconditioning or replacing plumbing; installing a well and/or septic system
- Adding or replacing roofing, gutters, and downspouts
- Adding or replacing floors and/or floor treatments
- Major landscape work and site improvements
- Enhancing accessibility for a disabled person
- Making energy conservation improvements
The USDA changed its rules in 2009 making millions of Americans eligible for its rural mortgage programs. The American dream of home ownership has become more difficult as families struggle to come up with the 20% down payment that many conventional home loans require. With the USDA loan, many are still able to get a zero down home loan.
Eligibility varies based on area, your income, credit history, and number of dependents claimed so it’s important that you call and speak with one of our experts to see if you qualify. Call us today at (844) 242-6656 to speak with a USDA specialist or inquire here.
Benefits of USDA Loans
Competitive 30-year fixed interest rates: With the guarantee of the federal government, a lender can offer the lowest interest rates to qualified individuals and families.
Flexible credit guidelines: Although a credit report must be pulled, the USDA Rural Development program has less stringent credit guidelines, allowing potential homeowners with poor credit the ability to qualify for a home loan.
No maximum purchase limit: The USDA Rural Development program has no maximum purchase price limit. However, a lender will still determine the maximum amount of loan each applicant is eligible for based on ability to repay.
Things USDA Loans are great for"
Land and the cost of building a home
Farms and equipment
VA Home Loan
American Residential Lending specializes in VA loans, which are loans guaranteed by the Department of Veterans Affairs (VA). These loans were established to provide transition assistance and other benefits to men and women who served or are serving in the Armed Forces of the Nation. This includes the Army, Navy, Air Force, Marines, Reservists, National Guardsmen, and certain surviving spouses. Also, if you are a disabled veteran, you may qualify for additional benefits on a VA home mortgage loan.
A VA loan can be used to buy a home, build a home and even improve a home with energy-saving features such as solar or heating/cooling systems, water heaters, insulation, and other energy efficient improvements approved by the lender and VA.
Veterans can apply for a VA loan with any mortgage lender that participates in the VA home loan program. A Certificate of Eligibility from the VA must be presented to the lender to qualify for the loan.
Benefits of VA Loans
Negotiable interest rate
No money down for loans up to $625K
No PMI (Private Mortgage Insurance)
Government limits the amount of closing costs and origination fees lenders can charge, as well as appraisal fees
There is no limit to the number of times a veteran may use the program
Right to prepay loan without penalties
Mortgage can be taken over (or “assumed”) by the buyer when a home is sold. Counselling and assistance is available to veteran borrowers having financial difficulty or facing default on their loan
Closing costs comparable – and sometimes lower – than other financing types
Counselling and assistance available to veteran borrowers having financial difficulty or facing default on their loan
Things to consider with VA loans:
Qualifying for a VA Mortgage Loan
The Veterans Administration offers excellent qualifying standards. The VA does not use credit scoring in their analysis of the loan. Even if you have experienced some financial difficulties in your life that caused your scores to be low but have maintained a good payment record over the past year or so, you may qualify for a VA mortgage loan. This can be a tremendous savings compared to the cost of conventional loans when the borrower’s credit scores are low.
VA Mortgage Loans may be refinanced
VA mortgage loans have built-in features that allow the loan to be refinanced to a lower interest rate without all of the criteria normally associated with a conventional loan. This is called an Interest Rate Reduction Loan (or VA Streamline); the veteran can secure a lower interest rate without any credit checks, appraisal, and income or asset verification and can roll the costs of the transaction into the loan so there are no out of pocket costs.
Assumable VA Mortgage Loans
VA loans are also assumable. If the person assuming the mortgage is a veteran with VA eligibility, the original veteran will not be giving up the amount of eligibility that they used to get the loan at the beginning. Veterans should use great care and closely investigate the terms of an assumption before allowing someone to assume their mortgage. It is too great a benefit to give up.
The VA Funding Fee
Although mortgage insurance is not required, the VA charges a funding fee to issue a guarantee to a lender against borrower default on a mortgage. The fee may be paid in cash by the buyer or seller, or it may be financed in the loan amount.
**Amres is not affiliated with or acting on behalf of or at the direction of FHA, VA, USDA or the Federal Government.