With years of experience and diverse product offerings, Lend Financial Mortgage works with clients to understand their purchase goals and make suggestions accordingly. We currently offer Conventional, Jumbo, FHA, VA and Correspondent Lending options. We also have great success in securing financing for self-employed borrowers as well as other special scenario borrowers.
Conventional loans are any loan which is not guaranteed or “backed” by the federal government. Fannie Mae and Freddie Mac back most conventional conforming loans that are $417,000 or less. Conventional loans were considered the “norm” for many years before the government got involved with the Federal Housing Authority and established FHA loans. Conventional Loans have many perks including only having to meet the guidelines of the specific lender. Appraisals will also only need to meet the lender’s guidelines instead of strict standards of the Federal Housing Authority and the Veterans Administration. Terms are also sometimes negotiable.
With all the perks there are also a few downsides. Conventional Loans typically require more down and higher credit scores. Fees and other costs are also set by the lender so in certain circumstances they may be higher (and lower and some). Also loans with higher than an 80 percent loan-to-value (LTV) ratio will require lenders to obtain Private Mortgage Insurance (PMI). At Lend Financial Mortgage, our experienced loan officers know all the ins and outs and can help answer all your questions.
Jumbo or Nonconforming
A Jumbo Loan, also known as a non-conforming loan, is a mortgage with a loan amount above the conventional loan ceiling, currently set at $417,000. Lend Financial is very experienced in navigating the complexities of Jumbo Loans and providing our clients they highest level of personalized service. Interest rates on Jumbo Loans are typically between 0.25% and 1.00% higher than conventional loans due to the greater risk to the lender.
As the nation has went through the housing boom and moved into the housing bust – no organization currently owns more homes than Fannie Mae. To help drive demand for home buyers to want to buy this inventory, Fannie Mae has come out with a special financing program called HomePath Mortgage Financing where people who buy homes currently owned by Fannie Mae can get a special deal on HomePath mortgage loans.
A few of the benefits of getting a HomePath loan from Fannie Mae when buying a home that is owned by Fannie Mae include: low down payment, flexible mortgage terms including fixed-rate, adjustable-rate, or interest-only options, less than perfect credit is okay, get a HomePath loan whether you are going to live in the house or buy it as an investment, down payment (at least 3 percent) can be funded by your own savings; a gift; a grant; or a loan from a nonprofit organization, state or local government, or employer, no mortgage insurance required, no appraisal required on HomePath loans.
When a property goes into foreclosure and is given back to the lender, it is common for it to need a few repairs. For homes in this condition, Fannie Mae developed a special financing program called the HomePath Renovation mortgage loan and is available only for people who want to occupy a property as a primary residence.
The primary benefit of this program is the borrower can fund both the purchase and light renovation at the same time thus avoiding any closing delays.
Lend Financial Mortgage is one of the few select brokers that have access to this program. This program allows you to purchase and rehabilitate your home before the buyer ever moves in. The loan to value ratio is based upon the value after construction is complete so no extra costs come out of pocket. With the number of homes that are either bank owned or short sales that are available on the market, the Fannie Mae HomeStyle Renovation mortgage program is becoming a popular choice with home buyers. The HomeStyle Renovation loan is different than the Fannie Mae HomePath Loan.
The HomeStyle Renovation mortgage is a single-close loan that lets you buy the home that may be in need of repairs. It is also possible to refinance the mortgage on an existing home and include the funds needed for repairs into the new mortgage. The loan amount for the HomeStyle Renovation mortgage is based on the “as-completed” value of the home rather than what the home is currently worth.
Federal Housing Authority (FHA) Loans
FHA loans are government loans issued by federally qualified lenders and insured by the Federal Housing Administration (FHA). These loans have been insured by the FHA since the creation of the agency in 1934. FHA loans have been particularly helpful for individuals who typically otherwise would not have been able to secure a loan from another source, due to low income or high risk. However with new regulations FHA loans are no longer just for low-income individuals. Nearly anyone can qualify for an FHA loan as there are no income limits in place, however there are limits on how much you can borrow. You will also need a decent credit score (600+)and have a reasonable debt to income ratio. A few other great perks regarding FHA loans include:
- Allow for lower interest rates as compared to conventional financing
- Allow people to buy a home with as little as 3.50% down
- Easier to use gifts for down payment and closing costs
- No prepayment penalty (a big plus for sub-prime borrowers)
- An FHA loan may be assumable
- Possible leniency during financial hard times
Most mortgage financing plans provide only permanent financing. That is, the lender will not usually close the loan and release the mortgage proceeds unless the condition and value of the property provide adequate loan security. When rehabilitation is involved, this means that a lender typically requires the improvements to be finished before a long-term mortgage is made.
When a home buyer wants to purchase a house in need of repair or modernization, the home buyer usually has to obtain financing first to purchase the dwelling; additional financing to do the rehabilitation construction; and a permanent mortgage when the work is completed to pay off the interim loans with a permanent mortgage.
Often the interim financing (the acquisition and construction loans) involves relatively high interest rates and short amortization periods. The Section 203(k) program was designed to address this situation. The borrower can get just one mortgage loan, at a long-term fixed (or adjustable) rate, to finance both the acquisition and the rehabilitation of the property. To provide funds for the rehabilitation, the mortgage amount is based on the projected value of the property with the work completed, taking into account the cost of the work. To minimize the risk to the mortgage lender, the mortgage loan (the maximum allowable amount) is eligible for endorsement by HUD as soon as the mortgage proceeds are disbursed and a rehabilitation escrow account is established. At this point the lender has a fully-insured mortgage loan.
FHA 203(k) streamline
FHA’s Streamlined 203(k) program permits homebuyers to finance up to an additional $35,000 into their mortgage to improve or upgrade their home before move-in. With this new product, homebuyers can quickly and easily tap into cash to pay for property repairs or improvements, such as those identified by a home inspector or FHA appraiser.
Veterans Affairs Loans
Veterans Affairs Loans (VA) are mortgages backed by the U.S. Department of Veterans Affairs. It was designed to offer long-term home financing to eligible veterans and their spouses where sometimes offer financing options are not available. VA loans allow veterans 100% financing without Private Mortgage Insurance (PMI) but typically have higher fees imposed by the VA. The VA charges a funding fee of 0 to 3.3% that is paid directly to the VA, the good news is it is allowed to be financed. The first time funding fee is 2.15% of loan amount and after it is 3.30% of loan amount. However, with a 5.00% down payment the funding fee drops to 1.500%. Seller can pay up to 6.00% of home’s value in doing closing costs. A minimum 640 credit score is required.
Conventional loans are divided into 2 categories.
FHA loans are insured by the government.