Finding the Right Loan: Buying and Refinancing
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WHERE SHOULD I START?
Start with Advisors Mortgage. Here is their advice on finding the right loan.
It is hard to know where to begin! There are so many options that it can be very confusing to find the right type of loan to suit your individual needs. You must first ask yourself many questions:
- How much can I afford to pay each month?
- Do I plan on keeping this property for only a few years or for a long period of time?
- Is a small payment a higher priority than paying the loan down quickly?
- Am I able to make a down payment?
- Over how many years do I want to pay a mortgage?
- Am I trying to find a mortgage or refinance an existing mortgage?
- Is my income stable? Will it be rising in the future?
The answer to these questions will help you know which loan will be best for you. Of course, we will guide you as to which program best suits your needs. However, there are a wide variety of loan options, so it will be useful to know some basic information.
- The larger the down payment, the better your options are for payment size, interest rate, and length of time to pay back the loan.
- A fixed interest rate will tend to be higher than an adjustable rate.
- The longer the term of payback, the smaller the payment will be.
- The smaller your payment, the larger the amount will be paid in interest.
- The more that you pay to interest, the slower that you are building equity.
It is also useful to understand the essential differences in types of loans. There are really only three basic types of loans:
- Fixed Interest Mortgages (FRM)
- Adjustable Rate Mortgages (ARM)
- A Hybrid (some combination of the two)
Loans are also classified as either government loans or conventional loans. Government loans such as FHA and VA have differing qualifications and parameters.
WHAT IS A CONVENTIONAL LOAN?
Conventional loans are broken down into either conforming or non-conforming loans. To qualify as a conforming loan (or an A paper loan), it must fall under the guidelines established by Fannie Mae and Freddie Mac, corporations that have established industry standards and guidelines that govern credit requirements, down payment amounts, and maximum loan amounts. Borrowers that do not meet those requirements due to flawed credit can often still obtain a non-conforming loan (B, C, or D paper loans). Your loan options can be limited by poor credit. A credit score is a system of points earned based on your credit history. This three-digit number (ranging from 300 to 900) is influenced by such factors, among others, as:
- Late payments
- Debt-to-credit ratio
- Total debt amount
- Age of accounts (the older the better)
There are three major credit bureaus (Experian, Equifax and TransUnion) that produce comparable credit scores using some version of FICO, the industry standard developed originally by Fair Isaac and Company. Because this credit scoring model is used by most lenders to determine your qualifications for a loan, you may want to see what you can do to increase your credit score before applying for a mortgage.
The perfect refinance made to order.
So you're not looking to buy your first home. After all, you've lived in your home for years. But you need a better rate or a lower payment or you need some cash to do some renovations. You might want to consolidate your high interest credit cards into one payment. Here's where the right refi comes in. There are 15 year terms and 30, etc. It really all depends on what you are looking for.
Are you looking to shorten your term and pay off your mortgage sooner? 15 year term! Are you looking for cash to do a renovation? Maybe you are in debt for a variety of reasons. Those situations can have solutions.
Debt Consolidation
For some borrowers, consolidating their debts to get rid of high-interest credit cards makes sense, but it's not always the best idea. Study your options as there are times when you can rid yourself of credit card payments and extremely high interest into one simple mortgage payment. Discuss this with your loan officer to see if it will work for you.
Talk to your mortgage specialist who will know the various programs so you can decide what best suits your needs. For information and to get your questions answered, contact Advisors Mortgage.
Advisors Mortgage: 888-843-9797 or 631-804-9044
Construction Loans to Fit Your Lifestyle
There Are Two Main Types of Construction Loans
- Construction-to-permanent: You borrow to pay for construction. When you move in, the lender converts the loan balance into a permanent mortgage. It’s two loans in one.
- You have one closing with a construction-to-permanent loan which reduces the fees you pay.
- Stand-alone construction: Your first loan pays for construction. When you move in, you get a mortgage to pay off the construction debt. It’s two separate loans.
You pay interest only on the outstanding balance. The interest rate is variable during construction, moving up or down with the prime rate. If the Federal Reserve raises or decreases short-term interest rates while the house is being built, your interest rate will change.
The lender converts the construction loan into a permanent mortgage after the contractor finishes building the home. The permanent mortgage is like any other mortgage. You can choose a fixed-rate or an adjustable-rate loan and specify the loan’s term, typically 15 or 30 years. When you’re ready, shop and compare mortgage rates.
Many lenders let you lock a maximum mortgage rate when construction begins. Lenders generally require a down payment of at least 20 percent of the expected amount of the permanent mortgage. Some lenders make exceptions.
Stand Alone Construction
Stand-alone construction loan can work out well if it allows you to make a smaller down payment. That can be a major advantage if you already own a home and don’t have much cash for a down payment but you will have more cash after you sell your home. You can live in your current home while your next home is under construction.
This type of loan has drawbacks, though:
You pay for two closings and two sets of fees — first, on the construction loan; second, on the permanent mortgage.
- You can’t lock a maximum mortgage rate. If rates rise during construction, you might have to pay a higher-than-expected interest rate on the permanent loan.
And if your financial circumstances change for the worse during construction, you may find it difficult or impossible to qualify for a mortgage.
Adequate savings for unexpected costs a must
The lender will make sure you have savings to pay for unexpected costs. There are always cost overruns when you are building a home that you may not know about until you are into it. We don’t want you to use every last dime before you start. Cost overruns are incurred when borrowers change their minds about what they want as construction proceeds.
Why not renovate your new home and turn it into your dream house with the Advisors FIX IT reno?
The FIX-IT MORTGAGE team of Renovation Loan Experts with Advisors Mortgage have combined experience of 125 years of experience to help you make the right product decisions. Using an expert in renovation lending will help you through the renovation loan process to successfully close as-is and on time.
FIX-IT MORTGAGE, whether FHA 203(k) or Fannie Mae HomeStyle, could be your chance to find an affordable home ownership opportunity. We want to help you get there! Fix-It is a proprietary trademark of Advisors Mortgage.
Building a home? Choose your builder carefully!
Find one that has built the kind of house you want in terms of price, style and size. Look into the builder’s credentials with the local home builders association and ask for references from previous clients and do your due diligence to examine their standing with the Better Business Bureau.
Expect ongoing inspections during construction.
Lenders will conduct routine inspections as the home is built. During this period, the lender pays the builder in stages, called “draws." There are a lot of choices when purchasing a home OR building onto a home you already own.
Questions? Advisors Mortgage: 888-843-9797 or 631-804-9044
CLICK LINK FOR ADVISORS MORTGAGE FIX-IT MORTGAGES!
Fix-It Mortgage by Advisors Mortgage-Buy It, Fix It, LOVE IT
- RENOVATION LOANS can help you buy a home that is discounted because of its age or condition. FIX-IT MORTGAGE is the proprietary name of the Advisors Mortgage renovation loan that gives you the opportunity to add the costs of repairs or renovations into your mortgage-- whether a purchase or for a home you already own! If you are looking at foreclosures, fixer uppers, handyman specials or other discounted properties that may be listed as “cash only” or “as-is”, this may be the right renovation loan solution for you especially if you are looking at homes in older neighborhoods that may need updating, improvements, or remodeling!!
- The FIX-IT MORTGAGE team of Renovation Loan Experts with Advisors Mortgage have years of experience to help you make the right product decisions. Using an expert in renovation lending will help you through the renovation loan process to successfully close as-is and on time. These renovation loan experts have combined experience of 125 years of success closing as-is and also on time. FIX-IT MORTGAGE, whether FHA 203(k) or Fannie Mae HomeStyle, could be your chance to find an affordable home ownership opportunity. They want to help you get there. (Fix-It is a trademark of Advisors Mortgage therefore proprietary.)
- The FHA 203(k) is the foundation of renovation lending. Originally 203(k) was written in the early sixties and then updated in the nineties. 203(k) has been the most popular choice in the market for buyers choosing a renovation loan in order to finance both the purchase and renovation costs necessary to close as-is. The down payment on these loans can be as little as 3.5%. At closing, the seller is paid, and the renovation funds go into an escrow account that is set up in the homeowner's name to fund the renovation costs through a system of inspections and draw requests. The FIX IT department walks borrower through the entire process.
You Are What Makes a Home a Home
Keep More of Your Money, Less on Down Payments
FHA Loan Information
You're looking for a new home, but you don't want to strap yourself when you're desire is to furnish your home to the max. You can go conventional or FHA. Whether you are a first-time homebuyer, moving to a new home, or want to refinance your existing conventional or FHA mortgage, the FHA loan program will let you purchase a home with a low down payment and flexible guidelines. Currently the down payment with FHA is only 3.5% of the value of the home.
FHA Limits
FHA loan limits were established to define how much you can borrow for a HUD-backed mortgage. Each state has different limits, so be sure to look up your state to understand what is available for your FHA home loan.
Down Payment Grants for FHA Loans
Paying the upfront costs of buying a new home can be challenging. To help overcome this hurdle, many local and state agencies offer down payment assistance in the form of grants or second mortgages. So FHA or conventional, it's all up to you. Give us call so we can determine which works best for you!
Different Homes for Different People - Which One Works Best For You?
Manufactured Homes are an important component of the housing industry. There are many questions and misconceptions about manufactured homes. What is the difference between a modular home and a manufactured home? Click the link below to learn the difference.
Questions? Advisors Mortgage: 888-843-9797 or 631-804-9044
203K Loans by Advisors Mortgage
What is a 203K Loan?
203k Loans Explained
As defined by Section 203(k) of Housing and Urban Development’s code, the 203(k) loan allows the home buyer to borrow enough funds to cover both the cost of the home and the price of repairs, including the cost of labor and material for those repairs, in one loan. Certain 203(k) loans may also be expanded to include funding for up to six months of mortgage payments.
The FHA does not directly lend these funds, but rather provides financial protection to lenders that do. The 203(k) loan can either be a 15- or 30-year fixed rate mortgage or adjustable rate mortgage (ARM). The amount the homeowner can borrow depends on qualifications like his/her credit and income, and the lender will also assess a down payment based on the total amount.
With the 203(k) loan, the maximum loan amount that can be borrowed is capped at 110 percent of the home’s projected value as determined by an appraiser.
Additionally, lenders require the borrower to pay mortgage insurance, and interest rates could be slightly higher than those associated with a conventional mortgage. However, they might be significantly lower than interest rates on loans taken out to cover repairs. There are two types of 203(k) loans available:
Limited 203(k): This loan is intended for smaller renovation and upgrade projects that are valued less than $35,000. There is no minimum cost requirement, although you can’t fund structural repairs with a Limited 203(k).
Standard 203(k): The Standard 203(k) loan is intended for more extensive repairs with a total price tag greater than $35,000. The minimal loan amount for this type is $5,000. Structural changes, like additions or full home renovations, are permitted. The home buyer must obtain architectural exhibits and meet building codes.
The homebuyer must meet specific borrowing criteria from FHA. This includes a debt to income ratio of 31 percent for the monthly housing payment and not more than 43 percent with all debt combined. Buyers must have a credit score of at least 620 to qualify. Additionally, the buyer will still need to make a down payment of at least 3.5 percent of the total amount borrowed.
NOTE: This loan is only available to people who will live in the home, although under certain situations, nonprofit organizations can also take out a 203(k) loan.
What kinds of renovations does the 203(k) loan cover?
The 203(k) loans cover just about any expense the homeowner can think of, with the exception of certain luxury items. Those renovations include:
- Remodeling, adding, or expanding rooms, such as bathrooms, bedrooms, kitchens, and garages
- Replacing portions of the home, such as roofs or carpets
- Adding a second story, a basement, a patio or deck, or renovating a swimming pool
- Installing a septic system and upgrading plumbing
- Upgrading electric wiring and heating
- Installing energy-efficient appliances, including air conditioners or special windows and doors
Contact Advisors Mortgage: 888-843-9797 or 631-804-9044
