| Conventional
Loan Programs |
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20% Down Payment Low Interest
Rates (No PMI) |
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10% Down Payment Low Interest
Rates (W/ PMI) |
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5% Down Payment
Low Interest Rates (W/ PMI) |
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0% Down Payment
Low Interest Rates (W/ PMI)
* Programs are available with 0% down depending upon special
guidelines such as credit scores, interest rate, and term of
loan.) |
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3% Down Payment
* FNMA offers a 3% minimum called the FNMA
97 Flex Loan. |
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0% Down Payment
80/20 Loan (No/ PMI) |
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10% Down Payment 80/10
Loan (W/ PMI) |
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* Fixed rates or
adjustable rate and Interest only loans are available on each
of the above loan programs. |
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** No maximum loan
amounts although FNMA Conforming loans maximum loan amount is
$ 322,700 for single family homes, and Freddie Macs Limit on
Single family conforming loans is $312,895. |
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FHA Home Financing |
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FHA-203B Loan
3% Investment in home (Includes Closing cost) (W/MIP) |
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FHA-203B Investor Loans
25% Downpayment requirement but only on HUD owned properties.
Escrow program is allowed but the 203K loan is not available
to investors. |
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FHA-203K Rehab loan
with 3% investment can roll the cost of the repairs into the
cost of the loan. Allows you to purchase a home that needs
extensive repairs at a substantial discount, and finance the
home and the repairs in one loan. |
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FHA-203B w/escrow
This program is available only on the purchase of HUD homes
and allows the financing of minor repairs into the loan similar
to the 203K loan but with lower cost. Maximum repair cost
is $5,500. |
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* FHA Adjustable
rate loans and step loan rates are available on most FHA loan
programs.
Maximum
loan amounts in the Houston area are as follows: Single
family $ 172,632 Two Family $220,992 Three Family $267,120 Four
Family $331,968. FHA Mortgage Insurance premiums are sometime
dependent on your down payment amount. You should discuss
this with your lender. |
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** Many other FHA
loan programs are also available but not widely used in today's
marketplace. You can refer to the HUD website for more information
on additional
HUD
loan programs. |
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FHA Down Payments:
If the sales price is $50,000 or more, the down payment required
is 2.25%. If the sales price is less than $50,000, the down
payment is 1.25%. |
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FHA Loan - The federal
government insures loans against default through the Federal
Housing Administration. This agency insures 100% of the principal
on loans made under their guidelines. FHA insured loans have
an up front premium which is usually typically added to the
loan amount and also a monthly premium which is added to the
borrowers total payment. |
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Calculating
the Up Front Mortgage Insurance Premium:
30 Year / Fixed Rate Loan = 1.50% X Loan Amount = Premium
15 Year / Fixed Rate Loan = 1.50% X Loan Amount = Premium |
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Calculating
the Monthly Premium:
30 Year / Fixed Rate Loan = .50% X Loan Amount = Annual / 12
mos. = monthly premium added to your mortgage payment
15 Year / Fixed Rate Loan = .25% X Loan Amount = Annual / 12
mos. = monthly premium added to your loan amount
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VA Home loan Programs |
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100% Financing for VA Fixed
rate loans for veterans |
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100% Financing for VA Adjustable
rate loans for veterans |
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VA Loan - The maximum
loan amount is $203,000 with no down payment. The maximum loan
amount with down payment is $300,700 provided the veteran's
loan guaranty( max of $60,000 ) plus down payment is equal to
25% of the loan amount applied for not to exceed $300,700. Example:
SP $325,000 - $300,700 VA max loan = $24,300 Down Payment. This
would be acceptable because the down payment of $24,300 plus
the max VA guaranty of $60,000 equals $84,300. $84,300/$325,000
= 25.94% |
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* * No down
payment is required if the veteran has full guaranty benefits
provided his loan amount is no greater than $203,000. Don't
forget that veterans can use their benefits more than once.
For loan amounts greater than $203,000, please follow guidelines
shown in Maximum Loan Amounts above. Call for details.
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The Veterans Administration
guarantees a veteran's loan against default. Although the VA
does not have an insurance premium, it charges the veteran a
Funding Fee that is 2% of the loan amount or 3% if the veteran
is using his benefits for the second or more times. The fee
may be paid in cash at closing or added to the loan amount.
If the Veteran is receiving a VA Disability payment at a certain
level as determined by the VA, the Funding Fee is waived even
if this is the second time for the Veteran to use his benefits. |
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Texas Veterans Loan Board Programs
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Loans for purchase of a Home |
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Loans for rehabbing a home |
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Loans for the purchase of
land only |
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* Texas Veterans
must meet certain requirements for further information go to
their website.
You do not have to be born in Texas or join the service from
Texas as long as you have lived here for 3 years.
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Credit Challenged Borrowers |
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These loans are typically
referred to a B, C, or D loan products. The downpayment and
interest rates are based on all of the factors that apply to
any loan such as your income debts, job history, rental history,
and credit. The rates for these loans vary greatly. You
should discuss all of the terms of your loan with the lender
and allow Eagle, Realtors agent or broker to review these with
you. Some of these loans have adjustable interest rates,
balloon payments and prepayment penalties. You should
understand all of the terms of your mortgage before going forward
with your home purchase.
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First Time Buyer Programs |
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Because of the wide variety
of these programs please give your agent with Eagle, Realtors
a call and we can explain these programs to you in some detail.
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Downpayment Assistance Programs
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Funds Needed to Close
Often, the most serious problem facing the buyer is coming up
with the funds needed to close (down payment, closing costs,
and prepaid items). The following is a list of sources that
are often overlooked:
- Gifts (Ameridream, Nehemiah, Family,
Etc…)
- Loans against an asset owned by the
borrower, i.e., 401K or savings plan at work
- IRA accounts under certain conditions
- Loans against stock or bond accounts
- Grants are sometimes available
- Lender premium pricing
- Second liens
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Grant Programs |
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Because of the wide variety
of these programs please give your agent with Eagle, Realtors
a call and we can explain these programs to you in some detail.
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Owner Financing |
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Because of the wide variety
of these programs please give your agent with Eagle, Realtors
a call and we can explain these programs to you in some detail.
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Assumptions
(assuming the previous owners loan) |
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Some loans are still assumable
but require that the borrower qualify on the loan as the original
borrower did. The fully assumable loans without having to qualify
for the loan were phased out in the early 1980's thus making
these loans not practical to assume any langer, since these
home have doubled or trippled in value since that time, and
the interest rates on those loans at that time wher far higher
than current rates. |
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Lease Option or Lease to Own Programs
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Because of the wide variety
of these programs please give your agent with Eagle, Realtors
a call and we can explain these programs to you in some detail.
The Texas Legislature has recently passed new laws
that affect the use of Contract for Deed and Lease
purchases in Texas.
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Contract for Deed
(Land Contracts) |
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Because of the wide variety
of these programs please give your agent with Eagle, Realtors
a call and we can explain these programs to you in some detail.
The Texas Legislature has recently passed new laws
that affect the use of Contract for Deed and Lease
purchases in Texas.
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Qualifying Debt / Income Ratio |
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As
part of the loan approval process, the applicant's monthly debt
payments are compared with their gross monthly income and the
proposed mortgage payment is compared to gross monthly income
as well. This process determines your total debt to income ratio
and your mortgage payment to income ratio. Conventional, FHA,
and VA loans all have ratio guidelines. Acceptable ratios are
based upon several factors such as the chosen loan program,
down payment, credit scores, cash reserve, etc. |
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Non-Occupant Co-Borrower
(Formerly referred to as a Co-Signer) |
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Occasionally, a borrower's
income may fall short of meeting the required debt to income
ratio. A non-occupant co-borrower may be used to assist meeting
these ratios under the following conditions: |
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Conventional
loan - A non-occupant co-borrower should be a blood
relative and the primary borrower must still meet debt to income
ratios which are no more than 5% above standard FNMA guidelines
before assistance from the non-occupant's income. Domestic partners
can sometimes be used. |
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FHA loan -
A non-occupant co-borrower should usually be a blood relative
or someone with a clearly defined relationship. All income and
debts of both are combined to meet FHA's debt ratios. Domestic
partners can sometimes be used. |
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VA loan - any
co-borrower must be an occupant and be the spouse of the veteran
or be another veteran. |
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Credit Scores |
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A lender must
obtain a credit report on each borrower involved in the loan
application. This report is drawn from three data sources and
will contain three credit scores for each borrower. These credit
scores can determine the availability and terms of your mortgage.
It is extremely important to determine these score as soon as
possible. Please refer to the On Line Pre-Qualification section. |
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Mortgage Insurance |
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Lenders reduce their exposure
to loan defaults by obtaining mortgage insurance. The amount
and cost depend on the type of loan chosen. |
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Conventional Loan - If the
purchaser is making less than a 20% down payment, the lender
requires the loan to be insured by a private mortgage insurance
company. The amount of mortgage insurance is added to the monthly
payment. Insurance costs are determined by down payment, term
of the loan, and the PMI program you choose. (PMI may be eliminated
entirely with the use of second lien financing). Contact your
Eagle, Realtors Associate or your lender for help in selecting
the best program for you. |
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Example: 5% Down / Loan Amount
$100,000 / 30 year fixed rate loan =100,000 X .78%= $780 / 12
mos.= $65 added to monthly payment for PMI insurance. |
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Fixed Rate Loan vs. Adjustable Rate Loan |
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A fixed rate loan implies
that the interest and principal portion of your payment remains
constant for the life of the loan while an adjustable rate loan
implies periodic changes to your interest rate and of course
your payment. In choosing an adjustable rate loan, you must
determine the frequency of rate changes and the amount. The
following should assist you in asking the right questions regarding
an adjustable rate: |
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Market Index
- The benchmark rate that is used each time your loan comes
up for adjustment( 1 year T-bill, Cost of Funds Index, etc.
) |
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Margin - The
lender adds a pre-determined amount (margin) to the market index
to arrive at the new rate for your loan |
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Rate Change Limits - Each
adjustable rate loan should have maximum change limits to the
rate for each adjustment and a limit to the total change over
the life of the loan |
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Adjustment Period
- This refers to how often your loan can be adjusted. You'll
commonly hear these loans referred to as 1/1, 5/1, 7/1, 10/1,
etc.. A 1/1 loan means that it adjusts once every year for the
life of the loan. A 5/1 loan means that the loan will remain
at the initial rate for the first 5 years and thereafter adjust
every 1 year for the remainder of the loan. |
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Initial Rate
- The rate at which the loan begins |
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When choosing an adjustable
rate loan, you assume a degree of risk but it could still present
you with a better choice than a fixed rate depending upon length
of time you'll live in the home, the current rate environment,
etc. I hope this information will help you ask the right questions
when researching adjustable rate loans. |
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Closing Costs and Prepaid Items
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Since closing costs and prepaid
expenses vary between lenders, contact me for a good faith estimate
of costs that are common and customary for the loan product
you have chosen. |
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What is a Second Mortgage? |
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Second mortgages are called
second mortgages because they are placed in the second position
on your title. Second Mortgages almost always have higher rates
than first mortgages. Home equity loans and home equity lines
of credit are both types of second mortgages. |
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Pre-approval vs. pre-qualification? |
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The pre-approval process
is much more complete than pre-qualification. For pre-qualification,
I ask a few questions, analyze the information provided and
issue an opinion as to whether I believe the loan is approvable.
Pre-approval is a full loan approval, without appraisal and
clear title, from either an automated underwriting system or
a DE Underwriter. Pre-approval can put you in a better negotiating
position, much like a cash buyer. |
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What is a Rate Lock? |
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A rate lock is very simply
put, rate insurance. There are four components to a rate lock:
loan program, interest rate, points, and the length of the lock.
The loan program is the type of loan you are locking (Conventional,
FHA/VA, Non-Conforming). The interest rate is the rate that
is available under current market conditions. Points are the
fees paid to pay your loan officer or to buy down interest rates.
One point equals one percent of the loan amount. The length
of the lock is the period of time that the lock will be good
for. Available options are 15, 30, 60, 90, 120 and 180 days.
As the lock period increases, rate tends to increase as well. |
