Home Loan Options

An FHA loan is a home loan that’s backed by the Federal Housing Administration. Banks and credit unions issue the loan and the FHA provides the backing, which means that if you can’t pay the mortgage, the FHA pays the lender instead. Designed for low- to moderate-income borrowers, FHA loans require smaller down payments than conventional loans and can work with low credit scores. WHAT ARE THE BENEFITS OF AN FHA LOAN? FHA home loan programs typically help first-time homebuyers, seniors or others with limits on what they can afford. FHA home loans offer the following benefits: A low 3.5% down payment Flexible income and credit requirements Low closing costs FHA FIXED-RATE HOME LOANS 30-year fixed rate FHA 25-year fixed rate FHA 20-year fixed rate FHA 15-year fixed rate FHA Either option offers the same interest rate stability, but the 15-year fixed rate FHA gives you greater power to move. With a higher monthly payment, you build up more equity in the house sooner. This means you can use proceeds from a house sale to make a bigger down payment on a future purchase, making it a smart long-term solution. A 30-year fixed rate FHA is the better option if you don’t plan on moving any time soon, or at all. Senior citizens often go this route when they look to downsize. FHA ADJUSTABLE-RATE MORTGAGE An FHA adjustable-rate mortgage (ARM) lets homeowners pay a low introductory interest rate for the first few years, then move to a new home before it adjusts, possibly upwards. If you know you want to buy a starter home that you will leave in a few short years, then an ARM could make sense for you. PrimeLending offers the 5-year hybrid ARM (fixed for the first 5 years, change annually after that, annual cap of 2 percentage point and a lifetime cap of 6 percentage points. CONVENTIONAL LOANS A conventional loan is a mortgage that is not insured, or guaranteed, by the federal government. They’re popular with borrowers who have good credit, a stable job and income, who can afford a down payment, and people who are financially stable overall. Government-backed loans like the VA, FHA, USDA and other loan programs are designed for people who can’t afford a significant down payment, have less than perfect credit, are first-time homebuyers, and others who may need some type of financing assistance. CONVENTIONAL LOAN BENEFITS Conventional loans are a good choice for new home purchases and refinancing. Unlike government-backed loans, they are sometimes harder to get because of the additional credit and financial requirements, but you will eventually discover that they offer much more flexible terms and fewer restrictions, which makes them more convenient. ADVANTAGES OF CONVENTIONAL LOANS FROM PRIMELENDING They are much simpler to apply and qualify for, with less paperwork, and you’ll have fewer rules and regulations to meet. You have a lot more options to choose from, the terms are more flexible and easier to customize and match to your financial situation and goals. They can be used for almost all types of properties, from single- and multi-family homes to condominiums and even manufactured homes. If you have at least 20% to put down on a purchase, or at least 20% equity when refinancing, you are not required to pay mortgage insurance. Conventional loan rates are often quite low since we know the borrower is financially stable and has good credit. TYPES OF CONVENTIONAL LOANS Fixed-rate mortgages have an interest rate that does not change for the life of loan. 15- and 30-year terms are the most common. They offer stable, predictable payments that also don’t change. Monthly payments are usually very low because they’re spread out over time. They’re great long-term loans if you plan to stay in your house for at least seven or more years. Adjustable rate mortgages have an interest rate that does change. There’s an initial up-front period when the rate is fixed. During this time, the interest rate and monthly payments are even lower than a fixed-rate mortgage. However, after the initial period, your rate can change or adjust, usually higher, along with your monthly payments. Adjustable rates are ideal for people who don’t plan on staying in their home past the time when the interest rate will change, usually after 3-, 5-, 7- or 10-year terms.

Jumbo loans are quite common. What makes them different from conforming loans is rather than meeting guidelines established by Fannie Mae, the Federal National Mortgage Association, and Freddie Mac, the Federal Home Loan Mortgage Corporation, the lender sets the guidelines. These loans with a different set of guidelines, or requirements for getting one, are important because average home prices vary widely across the United States, within states, and even cities and communities. The limits are based on average home prices. By comparison, conforming loan regulations are government-sponsored enterprises that buy or secure mortgages from lenders like investments. This helps make more money available to lenders they can then use to provide new loans to more borrowers. The regulations they establish are designed to create fairness to borrowers by establishing uniform mortgage documents and national standards for mortgages. In other words, you might consider jumbo loans to be a bit riskier than a conforming loan, but PrimeLending is here to guide you through those waters. HOW TO QUALIFY FOR A JUMBO LOAN As with any standard mortgage loan, jumbo loans come with a series of steps to take. Some of the major qualifications include: A debt-to-income ratio lower than 43% Cash reserves—it’s not uncommon for some borrowers to ask for proof that you have enough money in the bank Financial documentation that extends beyond a conforming loan, including full tax returns, W-2s and 1099s. WHY SHOULD I GET A JUMBO LOAN FROM PRIMELENDING? Fixed-rate and adjustable-rate jumbo loans are available Some jumbo loan programs allow down payments in the form of a gift

A VA loan is a great benefit to military personnel during and after their service. PrimeLending understands the importance of a “home base” for military and theifr families and is proud to be able to help active and retired military use this product to meet their unique needs. Like conventional loans or government-issued loans, VA loans come in different varieties. Benefits of a VA Loan VA loans are partly guaranteed (typically a quarter of the loan value) by the U.S. Department of Veterans Affairs and offer the following benefits: No Down Payment (Waiver based on VA Eligibility) Higher Loan Value No Private Mortgage Insurance Limit on Closing Costs Option for Seller to Pay Closing Costs No Penalty Fee for Early Payoffs Possible VA Assistance if you have Difficulty with Payments Who is eligible to receive a VA loan? VA loan eligibility depends on certain criteria. To obtain a VA home loan, an applicant must first obtain a Certificate of Eligibility (COE). Qualified applicants are those that have received a discharge other than dishonorable from an eligible branch of the service, including the U.S. Army, Navy, Air Force, Marines, Coast Guard, National Guard and Reserve and U.S. Military academies. They must also meet certain eligibility requirements. VA Fixed-Rate Home Loans A 30-year fixed-rate option gives you a stable, predictable monthly payment. These loans are great for people settling down in one house over a long period of time. They give deployed soldiers a warm place to come home. A 15-year fixed-rate option could help current service members who would like to build equity more quickly. You pay more monthly, but this pace builds more equity in your home. VA Adjustable Rate Mortgages The flexibility of a five-year adjustable-rate mortgage can be appealing to current military service members expecting to move in the next few years. ARM homeowners pay a low introductory interest rate for the first few years, then move or refinance before it adjusts upward. VA Jumbo Home Loan The VA will guarantee a maximum of 25% on your home loan.

Getting a construction loan to build your very own custom home from the ground up is a little different than buying an existing home. We have the perfect construction loan solution to help you make your dream home a reality. Here are a couple of considerations to keep in mind as you get started: Use a qualified builder. Anyone less than a licensed general contractor with a proven track record will make getting a loan harder. If you’re acting as your own general contractor, you may have additional requirements to prove you’re qualified for the job. Get an appraisal. How do you appraise something that doesn’t exist? Most likely, you will need to have an appraiser consider any specs or blueprints of the house, in addition to the value of the land. They compare that information to similar homes in similar locations and determine the value from there. TWO CLOSINGS. ONE LOAN. IT’S THAT SIMPLE. Luckily for you, PrimeLending can help with this complicated process. We offer a streamlined two-step construction loan process. First, you get a temporary loan to start the project. Second, once construction is complete, we’ll refinance your initial loan into a traditional mortgage at the most favorable terms possible. Here are just a few benefits that we provide to make the process smoother: We’ll lock the interest rate for your second refinance loan up to 12 months. This protects you against rate increases, and the lock fee will be refunded when the loan closes. Your first loan will come with a fixed rate and you only pay interest on money used for construction, not the entire loan amount. When you refinance your initial loan to your regular home mortgage, you’ll receive closing cost credits that may result in low or no cost refinancing.

Coming up with the cash for a down payment and/or closing costs on a house may seem challenging or even impossible to some homebuyers, but it doesn’t have to be. There are programs that can help make homeownership more affordable, many with low- and no-down payment options, and some connected to popular government-backed loans. DOWN PAYMENT AND CLOSING COSTS ASSISTANCE PROGRAMS: Conventional 97 — available through Fannie Mae and Freddie Mac, this program requires a 3% down payment and is available for the purchase of single unit primary residence properties. It’s best suited for buyers with excellent credit or average credit. HomeReady® — this Fannie Mae-backed program allows for a 3% down payment and offers discounts on mortgage rates and private mortgage insurance; it’s targeted at multi-generation households where multiple people contribute to the family income and can be anyone with an income below the average for the area. Home Possible® — a Freddie Mac mortgage option that is a great option for first-time homebuyers; it requires a down payment of only 3%. FHA Loan Program — allows for down payments of just 3.5% and can be used for primary residences with 1-4 units; a big advantage is that FHA mortgage rates tend to beat conventional rates. VA Loan Guaranty — this program is available to veteran or active duty military borrowers; there is no down payment requirement and no mortgage insurance charge, regardless how little you choose to put down. USDA Home Loan — is available to buyers in less dense parts of the country, including rural areas and many U.S. suburbs as well; it allows for 100% financing and offers reduced mortgage insurance costs as compared to other low- and no-down payment loans. 203K Renovation Loan — a great solution if your first home is a fixer-upper; if your purchase requires repairs, there’s a low minimum down payment requirement of only 3.5% and the loan covers the value of the property plus the repair costs. State Down Payment Assistance Programs — in addition, there are thousands of state-specific DPA programs for which you may qualify. The U.S. Department of Housing and Urban Development (HUD) maintains an updated list(link opens in a new tab) of active programs. 4) Certain restrictions apply. Not available in all areas. Please contact your PrimeLending loan officer for more details.