Financing Your Home
Loan Programs Overview
Mortgage Info
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Loan Programs Overview
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The Fixed Rate Loan
A fixed rate loan is a loan in which the interest rate remains the same throughout the life of a loan. Fixed rate loans usually are available for terms of 15 or 30 years.
The Adjustable Rate Loan
An adjustable rate loan is a loan in which the interest rate can adjust during the life of the loan. The adjustable rate mortgage (A.R.M.) can be designed to adjust as often as every year or may not adjust for 3-10 years. All adjustable rate loans have an annual cap, which means they cannot adjust more than that each year, and a life cap, which means they cannot adjust more than for the life of the loan. Some adjustable rate loans have a conversion clause allowing you to convert to a fixed rate loan at the time of the first adjustment.
Interest Only Loans
Interest Only Loans typically are adjustable every 3 or 6 months and the most common are tied to the LIBOR index (London). There are two benefits to this loan: a low monthly payment, and the ability to pre-pay principal at an time. If you have an existing home to sell, and particularly if you are transferring from another city, this might offer a way for you to qualifiy for two mortgage payments until you sell your home. Making regular payments of principal will enable you to build equity much faster than with a 30 year amortized loan.
The danger in this loan is in not making principal payments during the term of the loan. You could end up with a big balloon payment at the end of the term. Be sure to discuss this and any other loan programs in detail with your loan officer.
Discount Points
Discount points may be paid by the Buyer at closing or may be included in the price of the home and paid by the Seller up to the allowable seller contribution. One discount point equals one percent of your loan amount. For example, one discount point on a $150,000 loan would be $1,500. You may lower your interest rate by paying discount points. Your particular loan program will dictate how much the Seller may pay toward discount points and closing costs.Because discount points are considered prepaid interest, the amount you pay in discount points is tax deductible.
FHA Loans
FHA Loans are available in many programs similar to Conventional loans. Your Loan Officer can recommend a program that might best work for you.Although the interest rate usually is 1/4 percent higher than conventional loans, the MIP (Mortgage Insurance Premium) is lower. FHA also allows a higher debt ratio. In Gwinnett County the FHA loan limit is $165,000.
One type of FHA you may hear about is the Nehemiah Loan. This program allows first time home buyers with excellent credit and verifiable income to get into a home with very little money out of pocket. The Seller is required to pay the 3% down payment, the 3% closing costs, and a 1% fee to the Nehemiah Foundation. Although it may be agreeable to Buyer and Seller to increase the selling price to accommodate this program, unless the property is initially underpriced, it may not appraise for an increased amount. This can become an unsurmountable obstacle just before closing.
VA Loans
VA Loans are available to qualified veterans who have VA entitlement. For qualified veterans the benefit is the ability to obtain a 100% loan at a rate slightly higher than conventional. Higher debt rations are allowed. For first time users, the VA Funding Fee is 2.25% of the loan amount, usually rolled into the loan amount. There is no mortgage insurance premium.
You may be approved for a second VA loan. If your original loan is not paid off at closing (sold as a "loan assumption") the loan value would be deducted from your eligibility. For the second time user, the VA Funding Fee is 3.3% of the loan amount.
If you are going VA, be sure to order your CERTIFICATE OF ELIGIBILITY from VA well in advance. You may do this online, as well as get other questions answered, at this Veteran's Administration web site: http://www.homeloans.va.gov/lgyfaq.htm
Choosing A Lender
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In choosing a lender, ask yourself these questions:
In other words, does your lender have CONTROL?
after approval?
Georgia Department of Banking and Finance
Recommended Lenders
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Executive Financial, LLC - James Willard Mortgage Broker
jwillard@myexecutiveloan.com
Main- 770-418-9200 x 302
Fax 678-990-1922
CENTURY BANK OF GEORGIA
Brenda Cooper
Mortgage Consultant
109 Stonewall Street - P.O. Box 580
Cartersville, GA 30120
Phone: 770-387-1922
Direct: 678-721-2034
Cell: 770-655-1565
Grant Eshback
1810 Peachtree Industrial Blvd
Suite 240 Duluth GA 30097Office: 770-476-1910Fax: 770-497-1905Apply Online www.openhomemortgage.com
Florida Mortgage - Cape Coral, FL
Benchmark Home Mortgage
7680 Cambridge Manor Place, #200, Fort Myers, FL 33907
Jami DiMaria
239-425-1717
239-281-9675Click here for the Benchmark website
Credit Scoring - Advice From the Experts
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All lenders use credit scoring for conforming loans, and your credit score will affect the type of loan and the terms available to you, although there may well be other underwriting requirements in addition to the FICO scores. Because the three reporting agencies report differently and may update at different times, your score may vary from one agency to another. Typically, the lender will use your middle score.If you are unsure of your credit rating, it would be a good idea to order a copy of your credit report in advance of applying for a loan. This will enable you to correct any mistakes or pay off any old debts and have your credit report updated. All credit reported remains on the report for SEVEN YEARS from the last date of activity, except for bankrupcies which are on the report for ten years. The last activity is any change reported on your account, including your last charge, your last payment, or the date you paid off your balance.
You'll find a variety of offers for purchasing an online credit report, including your credit scores at Realtor.Com. You can also obtain a free credit report from each of the reporting agencies by writing to them directly.
EQUIFAX
P. O. Box 740256
Atlanta, GA 30374-0256
800-675-1111
Fax: 888-978-0146
ecis@equifax.com
TRANS UNION
P. O. Box 2000
Chester, PA 19022
800-916-8800 or 800-267-1440
Fax: 610-541-4286
EXPERIAN/TRW
P. O. Box 9595
Allen, TX 75013
800-567-5470
800-879-3752FICO credit scores are not used in FHA and VA loans, but your credit history will be considered.
Here are some tips from Southern Mortgage Reporting/INFO1:1. Always make payments on time. Deliquent accounts in the most recent 24 months have the most weight on your scores.
2. Avoid inquiries (loan shopping). Excessive inquiries may diminish your credit rating.
3. Avoid store accounts, including 90 day "same as cash" offers, as most stores sell their accounts to finance companies, and this will not look as favorable as a bank credit card or loan.
4. Avoid balances of more than 35% of your available credit line on your cards. Note: It is not a good idea to consolidate all of your debt on one card. A lower balance and longstanding good payment history on several cards is better than one larger balance.
5. Legal actions such as judgements (court decisions), collections (a deliquent account which has been turned over to a collection agency), and bankrupcies harm credit ratings.
6. Check your credit reports regularly for accuracy. If you find a mistake, be sure to dispute it in writing and check to make sure it has been corrected.
7. If you pay off an old debt, be sure to get a commitment from the creditor that your date of activity will not be changed at the time of the pay off (otherwise, it may remain on your credit for seven years from the time of payoff). NOTE: Paying off a deliquent account will not remove this bad credit from your report. It will remain for seven years from the date
of last activity, but will show that it has been paid.8. If you decide to pay off and close an account, be sure that it has been reported that the account was closed at the consumer's request.
Documents Needed for Load Applications
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1. Check or cash for Credit Report and Appraisal Fees. Approximately $350.00 total.
2. Names, addresses, phone numbers and dates worked for each employer for the past two years. Most recent pay stub. W-2s for the past two years.3. A copy of your present driver's license and Social Security card.
4. Names, addresses, account numbers and balances of all bank accounts you currently have open.
5. A copy of your previous three months' bank statements on each open account (all pages of statement).
6. Debts (credit cards and loans): Names, account numbers, addresses, balances, and monthly payments. Include accounts with zero balances and student loans.
7. Current or recent mortgage holders, if any, with names, addresses, and account numbers. Note: this includes any equity loans you may have.
8. Value of life insurance policies and the amount of their net value.
9. Approximate value of personal property, such as furniture, appliances, jewelry, expensive camera equipment, etc.
10. Make, year and value of vehicles.
11. Copy of the Purchase Agreement on the home you are buying.
Special Circumstances:
The following additional information may be required at loan application:
Self employed persons will need to supply the previous two year's tax returns, signed and with all attachments, and a signed Year to Date Profit and Loss Statement prepared by an accountant. If you are incorporated, please bring two years' complete corporate tax returns.
Applicants with rental property will be asked to supply information on lenders and copies of rental or lease agreements.
If present home is pending sale or sold, a copy of sales contract and/or HUD 1 (Settlement Statement).
If you are applying for a VA loan, bring your Certificate of Eligibility and discharge papers (DD214).
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