What type of loan program is best for you?
Should you get a fixed-rate or adjustable-rate mortgage? A conventional loan or a government loan? Is NON-QM the only avenue? Deciding which mortgage product is best for you will depend largely on your unique circumstances, and there is no one correct answer. Read through our many available loan programs below, to see what type of loan you might fit into. Please reach out to us today with any questions, concerns, or loan scenarios and one of our Loan Officers will guide you through your best options.
Fixed Rate Mortgages (FRM)
The most common type of loan option, the traditional fixed-rate mortgage includes monthly principal and interest payments which never change during the loan’s lifetime. In most cases, you can opt for any term length between an 8-Year Fixed term and a 30-Year Fixed term. In some cases, we can complete a 40-Year Fixed. (This currently excludes Jumbo loans and NON-QM loans, which don’t have as many term length options available)
Adjustable Rate Mortgages (ARM)
Adjustable-rate mortgages include interest payments which shift during the loan’s term, depending on current market conditions. These loans carry a fixed-interest rate for a set period of time (currently the most common are 5-7 years) before starting to adjust. This type of loan is typically only recommended if you are planning to sell or payoff the home before the initial fixed period is up, so you are able to take advantage of very low interest rates in the last few years with the mortgage.
You may also consider an ARM if you believe you will refinance again prior to the fixed rate period ending, in order to utilize your home equity for cash-out or debt consolidation (which many borrowers will do!). Prior to choosing a home loan, you should know the advantages and risks of adjustable-rate mortgages to make an informed, prudent decision. Talk with one of our Loan Officers about your options today.
FHA home loans are mortgages which are insured by the Federal Housing Administration (FHA), which is why FHA loans do have a monthly mortgage insurance expense. These loans allow borrowers to get low mortgage rates with a minimal down payment – great for first time homebuyers, borrowers with a lower than average credit score and/or a higher debt-to-income ratio.
VA loans are mortgages guaranteed by the Department of Veteran Affairs. These loans offer military veterans exceptional benefits, including low interest rates and no down payment requirement for the purchase of a new Primary Residence. This program was designed to help military veterans realize the American dream of home ownership. Our President, Jerry Anderson is a veteran, as well as many others who are near to us, so serving our veterans by ensuring they can maintain their freedom and dreams of homeownership is essential for us.
Jumbo loans are utilized when your mortgage balance will exceed your specified county loan limit (even if only by $1!). Jumbo loans will have stricter guidelines and require more documentation than conventional, government, or NON-QM mortgages. Go to: http://www.loanlimits.org/california/ to see what your county's maximum conforming loan limit is.
Home Equity Lines of Credit (HELOC's)
Home Equity Lines of Credit (HELOC) allow you to borrow against the available equity in your home, using the house as collateral, much like a credit card, without touching your first mortgage. As you repay your outstanding balance, the amount of available credit is replenished for you to use in the future. This means you can borrow against it as many times as you want, as long as you have the available credit to do so throughout the draw period, which is typically 10 years. At the end of the draw period, the repayment period (typically 20 years) begins. We offer both variable rate and fixed rate HELOC's and their terms may vary.
Interest Only Mortgages
Interest only mortgages are home loans in which borrowers make monthly payments solely toward the interest accruing on the loan, rather than the principle, for a specified period of time. This can offer you a very low monthly payment and can either be a 30-Year term length or a 40-Year term length. The interest rates on these types of programs can be higher than a Conventional or Government loan, however, not having to pay on your principal balance does make the payments exponentially lower – even with a bit higher interest rate.
Bank Statement Only Mortgages
This type of mortgage is very helpful for those borrowers who may not show an adequate amount of income in the typical ways (W-2s, paystubs, tax returns, etc). Depending on the types of deposits you have coming into your bank account, an underwriter will analyze your bank statements over a specified number of months to determine a qualifying monthly income to be used. These types of programs tend to have a bit higher interest rates. If at all possible, we will analyze your current income scenario to see if this is the best program for you, or if a conventional loan is an option.
Asset Depletion as income
This type of mortgage is used when you may not have any sources of income, but you have a large amount of money sitting in your checking, savings, stocks/bonds, etc. (Retirement funds may qualify you on a conventional loan type). An underwriter will analyze the accounts and divide the total assets by a specified number of months to determine a qualifying monthly income to be used. These types of programs tend to have a bit higher interest rates. If at all possible, we will analyze your current income scenario to see if this is the best program for you, or if a conventional loan is an option.
This type of loan is very rare, but we are newly offering! This type of loan is for your current Primary Residence when you either don’t have an income stream or your income stream is not sufficient to qualify on a conventional loan. In order to qualify, you will need to show cash reserves in the amount of 3 months – 84 months of your full housing payment (The new Principal/Interest payment, Homeowners Insurance, and Property Taxes). Number of months is determined by the specific loan program (Standard or Preferred) and your current credit score.
Investor loans are for those interested in purchasing Investment Properties (either under their personal name or in the name of an LLC) without having to qualify on their own stream of income and personal expenses. These types of loans can be qualified on solely a Lease Agreement and credit report.
Foreign national loans are meant for borrowers who live outside of the United States (if you are from an alternate country but have certain permits/visa’s to live or work in the US, there may be alternate options for you). There are a couple different program options for our foreign nationals depending on the specific circumstance. You can qualify with or without showing proof of income, as well as with or without having US credit.
Commercial loans are used for purchasing or refinancing a commercial property. Lines of credit are also available.
Bridge loans are a short-term financing option typically used when you are planning on selling your home. Most lenders require the home to be currently listed for sale. These loan types are utilized to pull cash out of your equity, that you would usually obtain by selling the property, ahead of the actual sale. This can be helpful when you need those funds for the purchase of another home and do not want to make your purchase offer contingent on the sale of your current home. A few “pros”: avoid potentially moving twice, access equity quickly without selling, present a stronger purchase offer by offering a cash down payment, receive bridge loan approval after being denied by banks, attain a loan against real estate currently listed for sale, income documentation not required. Keep in mind, this is a type of hard money loan and will have higher interest rates. These are short term loans and will need to be paid off much quicker than a standard mortgage, typically within 12 months.
Non-Traditional loans are any type of loan that does not fit the Fannie Mae guidelines of a typical 1-4 unit Single Family Residence/Condo. We have closed an array of loans that range from a Rural 40 acre horse property, to 5+ Unit Multi-Family Residences, Mixed Use Properties and Condotels. We also have loans to help those dealing with Short Sales, in Foreclosure, and even Bankruptcy.
NON-QM loans, or non-qualified mortgages, are a type of mortgage loan that allows you to qualify based on alternative methods. A few of these methods are listed above in greater detail: Interest Only, Bank Statement, Asset Depletion, Investor Loans, Foreign National, Debt Service Coverage Ratio, etc. There are many NON-QM loan types and ways we can work to get you qualified on a transaction. If you believe you can’t qualify on conventional financing, please reach out with your credit/income scenario and we will offer you our best advice! Sometimes, clients will be turned down for conventional financing with big banks who have given up on a loan. We never give up on our clients, if there’s a way to close the loan, we will find it!