Loan Programs

Conventional MORTGAGES

Highlights:

• Up to 97% financing with some programs.
• Gift funds are allowed for down payment.
• A family member co-signer is allowed and does not have to live in the property.
• There is no up front mortgage insurance (Unless you choose to have it).
• A home seller can pay a buyer's closing cost and pre-paid items up to 3% of sales price (Example: Home price $200,000 - seller can pay up to $6,000)
• Mortgage insurance can be removed when the loan balance is below 80% of the value of the home.
• Buying an investment property (A home you plan on renting to someone else) is allowed.
• Loan amounts up to $766,550.

Fixed Rate: This is the most common of all loan types in the U.S. A fixed rate mortgage allows you to lock in a rate for as long as 30 years, providing the lowest monthly payments.The rate is fixed for the life of the loan.  The standard terms of a fixed rate mortgage are 30-year, 20-year, 15-year and 10-year amortization. The longer the term, the lower the payment.  Fixed rates provide the security of keeping your payment the same for a long period of time and help with budgeting. 

ARM (Adjustable Rate Mortgage): The rate is fixed for a certain time period, then adjusts yearly after that time period.  Examples of ARMs are a 3/1, 5/1, 7/1, 10/1 ARMs.  The first number is the number of years the rate stays fixed. The second number, normally a number (1), indicates that the rate will change each year after the fixed rate period is complete. ARMs are helpful if you want to get a lower payment than a fixed rate provides. ARMs are typically amortized over a 30 year period. 

FHA Loans

Highlights:

• Low Down payment (3.5%)
• Gift Funds are allowed for down payment
• A family member, co-signer is allowed and does not have to live in the property
• Approval allowed when a person is only 2 years out of personal bankruptcy
• Approval allowed when a person is only 3 years out of foreclosure on a previous home
• A home seller can pay a buyer's closing cost and pre-paid items up to 6% of sales price (Example: Home price $100,000 - seller can pay up to $6,000)
• Relaxed credit requirements
• Upfront Mortgage Insurance can be financed into the loan.
• Loan amounts up to $498,257.

FHA loans are designed to make housing more affordable for first-time home buyers and those with low to moderate income. FHA mortgage rates can be either fixed or adjustable. They are insured by the Federal Housing Authority(FHA) and allow a home buyer to purchase or refinance a home with as little as 3.5% down-payment.  Monthly mortgage insurance (MI) is paid by the borrower and is included in the monthly payment. FHA loans also allow you to qualify for a loan if your credit is not good enough for a conventional loan. FHA Streamline Refinance loans are great for refinancing to a lower rate without an appraisal of the property. 

FHA Loans with MHDC Down Payment Assistance

The Missouri Housing Development Commission (MHDC) provides assistance for down payments on the purchase of a new home to first time home buyers. Income and credit limitations may apply.  These loans are only provided in the state of Missouri. Rates are typically higher than normal FHA rates, but are very helpful if you don't have enough money to pay the normal 3.5% down payment required by a typical FHA loan. Click on this link to learn more.

• The down payment assistance is  a forgivable loan after a set time period has passed
• There are programs for first time home buyers and existing home owners.
• Funds can be used for down payment and/or closing costs.

USDA Loans

Highlights:

• 100% Financing - No down payment is required.
• Gift funds are allowed for down payment
• Approval allowed when a person is only 3 years out of personal bankruptcy
• Approval allowed when a person is only 3 years out of foreclosure on a previous home
• A home seller can pay a buyer's closing cost and pre-paid items up to 6% of sales price (Example: Home price $100,000 - seller can pay up to $6,000)
• Low monthly mortgage insurance rate
• Upfront Mortgage Insurance can be financed into the loan.
• There ARE income limitations. If you make more money each year than the limit you will have to find a different loan to best suit your needs. Please click here to see what the limits are in your area. The line "MOD.INC-GUAR.LOAN" shows the maximum, combined income allowed for the home buying person(s) in your household. 

The United States Department of Agriculture (USDA) provides a loan program that allows a home buyer to purchase a home with a loan equal to 100% of the value of the home in a rural area. This loan program is not typically available within city limits. Income and credit limitations may apply. You can check to see if a property address is eligible for a USDA loan at USDA's website sear at this link:  USDA Address Eligibility Search. 

VA Loans

Highlights:

• 100% Financing - No down payment is required
• Gift funds are allowed for down payment.
• Approval allowed when a person is only 2 years out of personal bankruptcy
• Approval allowed when a person is only 2 years out of foreclosure on a previous home
• Up front VA funding fee can be financed into the loan.
• A home seller can pay a buyer's closing cost and pre-paid items up to 4% of sales price (Example: Home price $100,000 - seller can pay up to $4,000)
• No monthly mortgage insurance.
• Relaxed credit requirements.

Administered by the Department of Veterans Affairs, these special loans make housing affordable for U.S. veterans. To qualify you must be a veteran, reservist, on active duty, or a surviving spouse of a veteran with 100% entitlement. A VA loan is simply a fixed-rate mortgage with a very competitive interest rate. Qualified buyers can also use a VA loan to purchase a home with no money down, no cash reserves, no application fee and reduced closing costs. Some states allow a VA loan for refinancing as well. Your VA regional office can tell you if you're qualified. 

Jumbo Loans

Jumbo loans are provided for people who need loans larger than the conforming loan limit of $766,550.  The rates can be either fixed or adjustable and are typically higher than conforming or FHA rates.

HARP - Home Affordable Refinance Program

This program allows homeowners to refinance their current mortgage even though their home may have decreased in value over the past couple of years. It allows people to take advantage of the current low rate market when other conventional loan programs may not be allowed.

Reverse Mortgages

A Reverse Mortgage is a loan made available to seniors (Age 62 and over) that does not require a mortgage payment to be made by the borrower for the entire life of the loan. It is federally insured by FHA and can be used as a great tool for retired homeowners who are on a fixed income. For more information on Reverse Mortgages, Click Here.

Balloon Mortgages

This type of mortgage offers an interest rate that is lower than current 30 year fixed rates. Payments are amortized over a thirty years, similar to a 30 year fixed mortgage, but the note becomes due after the fixed rate period of either 2, 3, 5, 7, or 10 years. After the 2, 3, 5, 7, or 10, year period is up the note becomes due and payable. In many cases a lender will offer the opportunity to convert to a fixed rate that is slightly higher than market 30 year fixed rates at no cost. This can prevent a borrower from being forced to refinance a mortgage and eliminate any closing costs that are associated with refinancing.

Why would I choose a balloon mortgage? Balloon mortgage can be use for primarily the same reasons as an ARM. They can help you get a lower initial payment and are good for individuals who know they may not being staying in their house for 30 years. A Balloon mortgage does not meet the "Qualified Mortgage" standard set by the federal government.

Home Equity Loans and 2nd Mortgages

Home equity loans and 2nd mortgages are essentially the same. They give you the ability to use the equity in your home as cash for other purposes. For Example: Suppose you currently own a home with an appraised value of $100,000 and have a first mortgage of $70,000. Depending on your credit history, you may be eligible to get an additional mortgage (home equity loan or 2nd mortgage) for up to $30,000 ($100,000 Value - $70,000 First Mortgage = $30,000 available equity). Some lenders even offer home equity loans for up to 125% of the value of your home. Keep in mind that if you plan on selling your home in the near future and have mortgages that add up to 100% of the value of your home, your sale will generate very little cash for your use. Interest paid on home equity loans and 2nd mortgage is almost always tax deductible. Repayment terms on these loans may be anywhere between five and 20 years.

Home equity line of credit
This is a credit line established on the equity you have in your home. It offers flexible access to funds, and you only borrow money as you need it. Once a line of credit is established, it is almost always available to be tapped. Over time, you are allowed to pay back a large portion of the loan then draw on it again later when you need it.

Home equity loan
Instead of a line of credit, the home equity loan allows you to borrow one lump sum of money against the equity of your home. If you know that you will only be needing a fixed amount of cash, this may be a good loan for you.

Second mortgage
Taking a second mortgage on your home has possible tax advantages and helps you avoid PMI. Even with predictable payments, there are now two monthly payments or possibly two lenders involved.