LOAN PRODUCTS

Our company works with a wide variety of lenders to provide you with hundreds of loan products from which to choose. Talk to your loan officer to determine which products are best suited to your financial situation and goals. Some of the more common products available to you include:

Conventional vs. Government-Backed Loans

Fixed Rate Mortgage

Adjustable Rate Mortgage (ARM)

No Doc Programs

Interest Only ARM Program

Jumbo Mortgages

FHA

Construction

What is the difference between a Conventional and a Government backed loan?

A conventional loan is backed by bankers, that is to say they are secured by the lender. A government-backed loan is secured or backed by the government; however, it is still a lender who makes the loan. The two most common government backed loans are the Federal Housing Authority (FHA) loans, which are insured by the federal government and Veterans Administration (VA) loans, which are guaranteed. Any loan other than a VA or FHA loan is called a conventional loan. A conventional loan can be either conforming or non-conforming.

Conforming Versus Non-Conforming Loans

A conforming loan is one that conforms to the guidelines established by Fannie Mae or Freddie Mac. These guidelines establish the maximum loan amount, downpayment requirements, borrower credit guidelines, income requirements and suitable properties.

There are conforming and non-conforming or jumbo loans. The cut off point in dollars from a conforming to a non-conforming loan changes every couple of years. It is currently approximately $333,700. The interest rate on a jumbo loan is generally higher. Loans that meet the guidelines of the government-backed companies such as Freddie Mac and Fannie Mae are termed conventional loans.

Fixed Rate Mortgage

With a fixed rate mortgage, you know exactly what your principal and interest payment will be each month for the life of your loan. It won’t change because your interest rate doesn’t change. Your taxes and insurance component of your payment towards escrow can change (and probably will) if your taxes and insurance change. Unfortunately, there’s no way to lock those in. If interest rates go up, you’re protected with a fixed rate mortgage. But, you won’t benefit if rates go down. You can always take advantage of falling rates by refinancing.

Fixed rate mortgages might be right for you if:

Want the security of a fixed principal and interest payment.
Think that interest rates will go up.
Are on a fixed or limited budget.

Adjustable Rate Mortgage (ARM)

Compared to fixed rate mortgages, Adjustable Rate Mortgages (ARMs) offer a lower interest rate to start, so your monthly payments are generally lower. But, the interest rate moves up and down with the market based on an "index". Some of the more common indices include U. S. Treasury Bills, Cost of Funds Index (COFI) and the London Interbank Offered Rate (LIBOR). Most ARMs have an initial fixed rate period where the interest rate doesn’t change followed by the rest of the loan’s lifetime period where the rate is adjusted at predetermined intervals. Many ARMs have caps that limit how much your interest rate can change per period as well as for the life of the loan. Also be aware that there are some very low rates ARMs that start out with "discounted" rates. These discounted rates are below the market rate and will definitely go up at the first adjustment period.

Adjustable rate mortgages might be right for you if:

You want more property than you can qualify for now with a fixed rate.
You are confident your income will increase or rates will not go up much.
You plan on selling or refinancing within seven years of buying your home.

No Doc Programs

No Doc Programs are designed for borrowers whose income may be more difficult to verify (self employed, tips, bonuses, commissions, rental income, etc). These people often have good assets and good earning potential, but they have minimal documentation. These programs are typically based on credit rating only and the borrower won't be questioned about income or assets. These programs are generally reserved for borrowers with very good credit.

Interest Only ARM Program

The Interest Only ARM was created for borrowers who don't have the budget to immediately pay their full mortgage payment, but will in a few years. Whether the borrowers will have a large debt paid off or will be making more money in a few years, this program lowers the short-term payment making it more affordable. The Interest Only payment is for a set period of time and then adjusts to a fully amortized payment for the remainder of the loan term. But, until then, the Interest Only ARM Program makes the payment more manageable. Borrowers considering this program should plan to either move, re-finance, or adjust their budgets to the larger payments at the end of the interest only portion of this loan.

Jumbo Mortgages

Jumbo Mortgages or nonconforming loans exceed the loan limits set by the two publicly chartered corporations (Fannie Mae and Freddie Mac) that buy mortgage loans from lenders. The 2005 single family loan limit is $359,650. If you need to borrow more than that amount, you need a jumbo mortgage. These jumbo mortgages typically have a higher interest rate than conforming mortgages.

FHA

The Federal Housing Administration (FHA) provides a loan guarantee program instead of the standard private mortgage insurance (PMI) so qualified borrowers can get a mortgage loan with a down payment as low as 3%. The FHA doesn’t make the loan but rather they guarantee the loan minimizing the lender’s financial risk. FHA loans usually offer fairly liberal qualifying criteria compared to Fannie Mae and Freddie Mac and involve small down payments. The offer both fixed and adjustable loans.

Construction

Construction loans are used to finance the building of a new home rather than purchase an existing home. They are usually variable-rate loans that have interest only payments during the construction phase. Draws are scheduled based on the stages of construction to pay the builders.

Many construction loans are construction-to-permanent which means that when construction is complete, the loan is converted to a normal mortgage. This has the advantage of a single loan with one closing.