Conventional Loans
What are Conventional Loans?
Conventional Loans are mortgage loans that are not insured by the government (like FHA, VA, USDA Loans), but they typically meet the lending guidelines that have been set by Fannie Mae or Freddie Mac. Typically, conventional loans have better rates, terms and/or lower fees than other types of loans. However, conventional loans typically require a borrower to have good-to-excellent credit, reasonable amounts of monthly debt obligations, a down payment of 3-20% and reliable monthly income. Conventional loans are ideal for borrowers with good to excellent credit and at least a 3% down payment.
Most Common Types of Conventional Loans
Fixed Rate Mortgages: Your rate and payment never change.
Benefits: Lowest fixed monthly payments
Benefits: Low fixed monthly payments
Benefits: Lower rate than the 30 or 20 Year Fixed Loans; Pay less interest and pay your home off more quickly.
Benefits: Lower rate; Pay off your loan and build equity faster.
Benefits: Lowest rate; Pay off your loan and build equity the fastest
Adjustable-Rate Mortgages (ARM): After the initial period your interest rate can change once a year.
Fixed Rate for 3 Years, Adjustable Rate for the remaining 27 years
Fixed Rate for 5 Years, Adjustable Rate for the remaining 25 years
Fixed Rate for 7 Years, Adjustable Rate for the remaining 23 years
What are the Conventional Down Payment Requirements?
For Purchase transactions Conventional Loans require the home-buyer to put down at least 5% – 20% of the purchase price of the home. However, depending on the income of the buyer compared to the Area Median Income (AMI), a lower downpayment of 3% is possible. For a Refinance transaction, most lenders require at least 10% equity in the property.
What types of property are eligible?
Most conventional loan programs allow you to purchase single-family homes, warrantable condos, planned unit developments, and 1-4 family residences. A conventional loan can also be used to finance a primary residence, second home and investment property.
USDA Loans
A USDA Loan is a mortgage loan that is insured by the US Department of Agriculture and available to qualified individuals who are purchasing or refinancing their home loan in an area that is not considered a major metropolitan area by USDA.
Benefits of USDA Loans
Who is eligible for a USDA Loan?
Generally these loans are available to anyone who meets minimum credit guidelines and local area income requirements and is purchasing a home or refinancing their home in an area that is not considered a major metropolitan area by USDA.
Some common misconceptions of USDA Loans:
Great for First-time Home Buyers
100% Financing (including Closing Costs)
No Down Payment Requirements
No Prepayment Penalties
Low Rates
Existing Homes, Foreclosures, New Construction
These materials are not from HUD or FHA and were not approved by HUD or a government agency.
FHA Loans
It’s easy to understand why many people looking for a new home are turning to FHA insured loan programs. Because FHA Loans are insured by the Federal Housing Administration homebuyers have an easier time qualifying for a mortgage. Those who typically benefit most by an FHA loan are first-time home buyers and those who have less than perfect credit.
As FHA Loan specialists we can help you understand any new changes to the FHA loan program. We’re here to create a customized solution that works best for you and your family.
How FHA Loans Work
At Suburban Mortgage we want to help you understand how a FHA mortgage loan works. In all actuality the Federal Housing Administration (FHA) doesn’t loan any money, they insure it. This means that you’re considered to be a less risky borrower than someone who might not have the backing of the federal government. Our role is to make sure that you qualify for an FHA mortgage and structure our loan to reflect it.
The other pages in the FHA loan center can help you understand more about this unique program. Whether you are trying to determine if you qualify or if you are interested in finding out what kind of documentation you’ll need to ultimately get your loan, our site can provide you the information you are seeking.
An important resource for considering a FHA loan is the official Housing and Urban Development website. There you can find even more answers to questions and learn more about insuring your loan through the Federal Housing Administration.
FHA Loan Benefits
FHA insured mortgages are some of the best kinds of mortgages available. This is because they can help more people into the home buying market. Check out the list below to understand some of the most basic benefits of an FHA mortgage.
Easier to Qualify for – because they’re backed by the federal government lenders are more likely to give you the kind of loan that you need.
Low Down Payment – FHA insured mortgages only require a 3.5% down-payment which makes it easier for people to own homes. Additionally the 3.5% can come in the form of gifts, unlike many other loan programs.
Lower Credit Borrowers Qualify – because FHA insured loans are backed by the government those with a poor credit history have an easier time getting this kind of loan.
Better Interest Rates – with the backing of the government these loans typically have a better interest rate than most traditional mortgage loans.
Better Home Stability – the FHA has programs designed to help homeowners keep their homes during hard times. The will work with you to help your home from falling into foreclosure. Always try to work out problems with your lender before the situation becomes dire.
FHA Loan Checklist
When you’re applying for an FHA loan the following list of documents will help expedite the process. We can help you understand any part of the FHA loan process so don’t hesitate to contact us with any questions.
Employment Info
Past two years completed tax returns.
Past two years W-2’s, 1099’s and any other necessary tax forms.
One month worth of newest pay stubs.
Self-employed will need three years tax returns and YTD Profit & Loss Statement.
Savings Info
Past three months full bank statements for all accounts.
Any recent statements from investment accounts (retirement, 410k, mutual funds, etc.).
Personal Info
Driver’s License or other official State identification.
Social Security Card.
Any Divorce, Palimony, Alimony Documents.
Green card or work-permit (if applicable).
FHA Loan Common Questions
Check out our list of common questions related to FHA mortgages. Check out our list of common questions related to FHA mortgages.
What is the FHA?
What makes a FHA insured mortgage beneficial?
Where can I find FHA forms and other literature?
What is the FHA loan limit in my area?
Can I pay an FHA loan off early?
Can a FHA insured loan help me lower energy costs?
Is there a FHA program to help me refinance my loan?
Can I refinance a fixed rate FHA loan?
What is the recommended debt-to-income ratio for FHA loans?
Are FHA loans assumable?
Will I have to pay mortgage insurance with an FHA loan?
Can I get a “fixer-upper” of a home with a FHA mortgage?
FHA Qualifications
In order to qualify for an FHA loan, a borrower typically needs to meet this criteria:
FHA Streamline Refinance
What Is an FHA Streamline Refinance?
If you already have an FHA mortgage then you might qualify for a FHA Streamline Refinance. An FHA Streamline Refinance is a great way for a borrower with an existing FHA backed mortgage to reduce their interest rate, reduce their payment or possibly both.
Here are some really cool facts about an FHA Streamline Refinance:
The Refinance Must Have A “Purpose”
Streamline Refinance applicants must demonstrate that there’s a Net Tangible Benefit in the refinance or in other words a legitimate reason for refinancing. For Example:
Your Loan Balance May Not Increase To Cover The New Loan Costs
The FHA prohibits increasing a Streamline Refinance’s loan balance to cover associated loan charges. The new loan balance may increase but only by the cost of the Upfront Mortgage Insurance Premium. All other costs — origination charges, title charges, escrow — must either be paid by the borrower as cash at closing, or credited by the loan officer in full.
These materials are not from HUD or FHA and were not approved by HUD or a government agency and in some cases a refinance loan might result in higher finance charges over the life of the loan.***
VA Loans
A VA loan is a mortgage loan guaranteed by the U.S. Department of Veteran Affairs (VA) that is available to most US service members. It offers some very great benefits to those that have served our country.
Who is eligible for a VA Loan?
As a rule of thumb, almost all active duty or honorably discharged service members are eligible for a VA loan.
You may be eligible for a VA loan if any one of these statements describes you:
What is the VA Funding Fee and is it required?
Yes, it is required. It is a fee paid directly to the Department of Veteran’s Affairs so that they can guarantee your loan and provide you with the opportunity to receive a loan with little to no money out of pocket.
How much is the VA Funding Fee?
It depends on several factors including: Whether you are Active Duty, Retired, Guard or Reserve and whether you this is a first time use, subsequent use, or a cash-out refinance as well as how much of a down payment you are putting down. The fee can range from as little as 1.25% up to 3.3% of the loan. Generally, the more money you put down the lower the VA funding fee. Please contact us and we will help you to determine how what the exact cost of the VA Funding Fee would be for your particular situation.
Do I have to pay the VA Funding Fee out of pocket?
No, you can include the VA Funding Fee in your loan and pay the funding fee over the course of your loan.
Do I still have to pay other normal closing costs like Appraisal, Title and Escrows?
Yes, however with a VA loan if you are purchasing a new home the seller can pay for all or part of your closing costs.
What is a VA Streamline Refinance?
A VA Streamline Refinance is a refinance option that is available if you already have a VA mortgage and you want to lower your interest rate with little or no out-of-pocket closing costs. You don’t have provide bank statements, W2s, job verification or paychecks.
These materials are not from HUD, VA, or FHA and were not approved by HUD or any other government agency.
Reverse Mortgage Loans
Introduction to Reverse Mortgage Loans
Many homeowners have found that a reverse mortgage loan is a great way for them to take advantage of the equity they have built up in their homes.
A reverse mortgage loan is different than a traditional mortgage. With a traditional mortgage loan you make monthly mortgage payments, but with a reverse mortgage loan the lender pays you money through monthly installments, a one-time lump sum payment, a line of credit or a combination of a line of credit and monthly installments. The money that you receive is dependent on your age, the value of your home and the current interest rate.
One of the great advantages of a reverse mortgage loan is that you are not required to pay the loan back until the home is no longer your primary residence or you fail to maintain the home, or fail to pay property taxes and/or homeowner’s insurance or do not otherwise comply with the terms of the loan.
If you’re aged 62 or older and own your home you might be eligible for a reverse mortgage loan. Contact us to find out more about reverse mortgage loans and ways to make it work for you, or apply now and start the process of tapping the equity in your home.
Check out these pages for more information about reverse mortgage loans.
Are Reverse Mortgage Loans Safe?
You’ve worked hard to pay the mortgage on your home. With a reverse mortgage loan you can receive a portion of the equity that you earned. A federally insured HECM reverse mortgage loan can help you unlock that equity by increasing your monthly cash flow. Rest easy knowing you’re protected because with a reverse mortgage loan you can:
Speak with one of our professionals today and learn how you can make the most of a reverse mortgage loan.
3 Reverse Mortgage Loan Questions to Consider
What is a Reverse Mortgage Loan?
A reverse mortgage loan is a loan designed to allow seniors to draw upon the equity in their homes. Seniors can select to receive the loan proceeds either by a lump sum payment, by monthly installments, as a line of credit or as a combination of a line of credit and monthly installments thus providing cash flow even after retirement. The reason this type of loan is called a “reverse mortgage loan” is because the loan proceeds are paid to the home owner.
Eventually the money paid to the homeowner is repaid with interest, however the loan generally does not become due until the borrower passes away, sells the home, no longer maintains the home as the primary residence or fails to pay property taxes, fails to pay homeowners insurance or otherwise fails to comply with the loan terms.
Why should I get a Reverse Mortgage Loan?
Getting a reverse mortgage loan is a big step and needs to be carefully evaluated. Many people have found that by taking a reverse mortgage loan they avail themselves of the equity they have built in their home.
Typically those who benefit most from a reverse mortgage loan are those who plan to stay in their homes over an extended period and have built a decent amount of equity in their homes.
Contact one of our professionals today to find out if you have enough home equity to make a reverse mortgage loan a good decision for you. If you have a good amount of equity in your home and you plan on staying there for an extended period of time then a reverse mortgage loan might be right for you.
How do I qualify for a Reverse Mortgage Loan?
If you own your home and are 62 years of age or older you might be eligible to apply for a reverse mortgage loan. The home you are thinking of taking the reverse mortgage loan out on must be your primary residence. There are some conditions to what type of home may qualify.
We can help you figure out if you’re eligible for a reverse mortgage loan. Call us today!
What about repaying a Reverse Mortgage Loan?
The very nature of a reverse mortgage loan can be confusing. With a reverse mortgage loan, lenders pay you either in monthly installments, with one lump sum, a line of credit or as a combination of a line of credit and monthly installments. The following lists provide information regarding repayment of a reverse mortgage loan.
A reverse mortgage loan comes due when under the following conditions:
When the reverse mortgage loan becomes due there are two options for paying it off.
Like all loans a reverse mortgage loan does carry conditions in order to remain valid. Reasons a borrower may find themselves in default include:
These materials are not from HUD or FHA and were not approved by HUD or a government agency.
Refinance
Refinancing a home mortgage can be a big decision for many homeowners. Your situation and needs change over time so why shouldn’t your mortgage? Now might be the right time for you to refinance into a lower rate mortgage. You should take the time to consider the following questions to see if refinancing makes sense for you.
Refinancing is an easy way to solve many of your mortgage worries. Getting a lower monthly rate and paying less over the life of your loan just makes sense. At Suburban Mortgage we’re ready to find the right refinancing solution for you. Our staff of refinance experts will help you evaluate your mortgage needs and draft a refinancing plan that will save you money.
Be sure to check out our mortgage refinance center to get the information you need so you can make a sound decision for you and your family.
Common Refinance Questions
Determining if a home refinance loan is right can be confusing. That’s why we’ve put together a list of common questions that homeowners have when considering refinancing.
What is Refinancing?
Refinancing is simply getting one loan to pay off another.
What does refinancing cost?
Typically, the closing cost of a refinance is between the loan amount, lender fees included. You may choose to pay points (see below) to lower your interest rate, or you could want to do a Low- or No-cost refinance.
What are points?
Points (or discount points) are a way of lowering your interest rate. By paying 1% of the total loan amount up-front, a borrower can lower his interest rate by about 1/8%.
How does the APR differ from the interest rate?
The rate refers to what percentage of your loan you will pay in interest per month, whereas the annual percentage rate (APR) is an adjusted percentage that expresses the yearly cost and also includes certain charges and fees.
What are FRM & ARM?
The interest rate of a Fixed-rate Mortgage (FRM) will not change for the life of the loan. Alternatively, an Adjustable-rate Mortgage (ARM) will be subject to periodical interest rate adjustments based on interest rates around the country.
Should I modify my loan or apply for a refinance?
It depends. When you refinance, you may be able to get lower interest rates, but there are additional costs. On the other hand, a loan modification usually means extending the term of the loan and increasing the interest rate, but adding no other fees.
What is PMI?
PMI stands for Private Mortgage Insurance. Borrowers with less than a 20 percent down payment are required to carry this insurance as a means of protecting the lender against default.
Will I need to get an appraisal when I refinance?
Yes.
Does bad credit exclude me from a refinance loan?
Not exactly. When considering a refinance loan it’s important to remember that the better your credit score the better interest rate you can get. So if you don’t have perfect credit you can still qualify for a refinance loan but you’ll want to make sure that you’re lowering the interest rate on your loan enough to make a refinance worth it.
Do I need to have equity in my home to refinance?
Yes. The general rule is that you need to have 90% loan-to-value ratio before you can refinance. This means that your home is worth about 10% more than the loan that is current on the house. Additionally, your home will need to have increased in value since you purchased it.
Can I get cash from a refinance loan?
Yes. Depending on the type of refinance loan you opt for you can take out cash to use for bills, home repairs or whatever you might need it for.
Can I “lock-in” an interest rate on a refinance loan?
Yes. Now is the time to refinance because interest rates are so low.
How long does it take to go through the refinance process?
A typically refinance usually takes between 2 and 4 weeks. Getting your home appraised is usually where most hang-ups occur so if you can schedule a home appraisal right away than getting a refinance loan is usually very quick.
How You Can Benefit from a Refinance
There are many refinancing options available, and the benefits of each are unique. Whether you’re looking to reduce your payments or consolidate your debt, we can help. Call or come in today to get your process moving.
Lowering your Monthly Payment
Cashing-out Equity
Consolidating Debt
Dropping Private Mortgage Insurance
Buy Down your Rate
Low-cost Refinancing
Refinance Checklist
When you refinance, certain documents and information will help the process move forward more quickly. Below are listed some of the more common documents needed to refinance. The more information you have on-hand, the faster your refinancing will go.
You are likely to need:
Employment Information
Assets & Obligations Information
Insurance Information
What You Need to Know about Refinancing
People refinance for a number of reasons. You may like to consolidate first and second mortgages, get a lower interest rate, or lower your monthly payment. Perhaps you want to switch from an Adjustable to a Fixed-rate Mortgage, or to stop paying Private Mortgage Insurance (PMI). Maybe you’re just looking to cash out some of your equity for home renovations. Refinancing allows you to redefine your mortgage loan to better fit your current needs.
However, there are many things to consider before deciding to refinance your mortgage. With so many options it’s important to refinance the right way. At Suburban Mortgage we’re happy to show you all of your options so you can make the best decision on a refinance loan. If you would like to find out if a refinance is right for you then give us a call today at 801-221-9400 .
Interested in Refinancing? Consider this…
Are you planning on moving soon or are you in it for the long-haul?
If you’re planning on sticking in your home for more than two years then a refinance mortgage is a great option. Because a refinance loan does require closing costs homeowners who plan to stay in their home for more than two years will usually; make up for those costs with lower monthly payments. If you’re looking to move within the next two years then a refinance might be a good idea depending on how far your rate drops.
Do you need to tap into the equity of your home?
For most people a home is their most important and substantial investment. History proves that home values increase over the long-run. If your home is now worth more than it was when you purchased it you can use a refinance loan to access that extra value and turn it into cash to pay for unexpected bills, college or to start a business.
Is it time to grow your home?
As families grow, homes can feel smaller. Refinancing your mortgage is a great way to grow money for a home improvement project. The most attractive part of this is that a home remodel can increase the value of your home. This type of refinance can really pay for itself in the end.
Are the terms of your mortgage outdated?
It’s likely that your situation in life is not exactly what it was when you first closed on your home. If that’s the case then maybe your mortgage terms need a little updating too. Refinancing is a great way to switch from an adjustable to a fixed rate loan or to get into a 15 year loan as opposed to a 30 year.
Don’t pass up the chance to improve your mortgage situation today by calling our lending professionals to see if refinancing is the right for you.
Non-QM Loans
Many homebuyers do not have the standard or consistent forms of income that are typically required by mortgage lenders. Yet, while they may not be able to qualify for conventional loans for various reasons, these buyers may still have enough income or assets to afford homeownership. In these situations, a non-qualified mortgage (non-QM) may be the solution.
What is a Non-QM loan?
In order reduce risk of loss after the mortgage meltdown in 2008, federal regulators tightened borrower requirements on mortgage loans that could be backed and bought by government agencies. Loans that meet all the new criteria are called “qualified mortgages.” Any loan that falls outside of those qualifications is called a “non-qualified mortgage” or non-QM.
A non-QM is a mortgage loan that uses alternate methods to verify income to qualify borrowers. Even though these loans do not meet the standard requirements, they are not necessarily riskier loans. All borrowers are still required to prove their ability to repay the loan. Because there is more work required to process non-QM loans, the interest rates tend to be anywhere from 0.5% to 5% higher, depending on the loan terms.
Who Do Non-QM Loans Help?
Non-QM loans are often a good fit for those who have unique income situations:
What are the Benefits of Non-QM Loans?
The benefits of Non-QM loans include the following:
What Documentation is Required for Non-QM Loans?
The documents required will vary greatly based on the financial situation of the applicant. In order to verify income, you can provide either personal and business tax returns or bank statements or investment account statements. In some cases, income verification is not even necessary. Credit scores and debt-to-income ratios will be factored in. Non-QM loans take a more holistic approach to an applicant’s financial situation though, rather than relying on a standard underwriting matrix.
What Types of Non-QM Loans Are Available?
Non-QM loans employ non-standard mortgage terms in order to help borrowers qualify. These include loan terms longer than 30 years, interest-only loans, higher debt ratios or alternate income verification methods. Non-QM loans can be used for primary residence mortgages, refinance loans, cash-out refinances, and investment property loans.
Foreign National Loans
Want to buy a home in the United States, but you’re not a US Citizen?
No problem, Our Foreign National Loan Program makes buying a home in the US easier for non-US citizens. While the guidelines on these loans are different than conventional, conforming or other federally insured loan programs, we are confident that our loan program can meet your needs.
Here are some of the key details:
Bosnia and Herzegovina (Bosna i Hercegovina)
Is a mortgage program that will allow Bosnian nationals to buy a real estate property in Bosnia and Herzegovina. The rules for this loan are significantly different from the loans here in the United States, and there will be some involvement from the applicant and some upfront costs.
Serbia – Work in progress
Croatia – Work in progress
Montenegro – Work in progress
Macedonia – Work in progress
Turkiye – Work in progress
Commercial Loans
We can help you get a Commercial Loan
As your company continues to grow, increasing your workspace through a commercial mortgage becomes increasingly important.
More information about our commercial loan offerings can be found by contacting us via email or by telephone at 801-221-9400 . Our qualified professionals are ready to answer any and all of your commercial loan questions as well as help you begin the application process.
