Types of Loans Available
The Kahn Team has helped many borrowers realize their dreams of home ownership. Our team qualifies borrowers for the types of loans listed below. We consistently offer great rates and unsurpassed customer service. Contact us today to receive a quote and a free consultation.
An FHA loan is backed by the Federal Housing Administration; they are available for various terms with both fixed and adjustable rates.
FHA Loans are government backed mortgage loans issued by FHA-approved lenders. FHA Loan programs offer opportunities for home buyers as well as homeowners looking to refinance. FHA Loans are fully insured by the U.S. Federal Housing Administration, a division of the U.S. Department of Housing and Urban Development. This insurance allows lenders to offer many borrowers the opportunity for home ownership with more flexible requirements.
FHA Loans are available with a variety of terms. 15-year fixed-rate mortgages, 30-year fixed-rate mortgages and 5-year ARMs are the most common FHA options. There are limits on how much can be borrowed using an FHA Loan. These limits vary based on where the borrower lives. The limits for single family homes are between $271,050 and $729,750 in most U.S. counties. Please contact us for more information about FHA mortgage limits in your area.
FHA Loans are an attractive option for many people, especially first-time home buyers. FHA Loans are generally easier to qualify for than conventional loans. Federal Housing Administration insurance provides the security of a government-backed loan. Down payments can be as low as 3.5% of the purchase price.
FHA STREAMLINE REFINANCE
Save time and money by refinancing your FHA mortgage with a streamline loan.
The FHA Streamline Refinance Program allows borrowers to reduce the interest rate and monthly payment on their current home loan quickly and easily. FHA Streamline Refinance requires significantly less paperwork than other refinance options. Most FHA Streamline Refinance loans do not require an appraisal.
FHA Streamline Refinance Guidelines
Available to homeowners who are presently using the home to be refinanced as their primary residence. The home’s current mortgage must be an FHA insured loan and must be in good standing. The new loan must conform with current FHA Loan guidelines.
An FHA Streamline Loan is typically the best option for borrowers interested in refinancing their home with a current FHA insured mortgage.
This loan is exclusively for Veterans to purchase or refinance homes; VA loans generally offer easy qualifying and minimal or zero down payment.
VA Loans offer long-term, fixed or adjustable rate competitive financing to American Veterans. Active duty personnel, Reservists, National Guard members and some surviving spouses are also eligible for VA Loans. All VA Loans are issued by federally qualified lenders and are guaranteed by the U.S. Department of Veteran’s Affairs (VA).
The VA determines eligibility and issues a certificate to qualified applicants, which is submitted to the lender. It is generally easier for borrowers with less than perfect credit to qualify for a VA Loan than a conventional loan. VA Loans also allow Veterans to qualify for larger loan amounts than traditional Fannie Mae / conforming loans.
How VA Loans Work:
- No down payment option available on many VA Loans for single-family homes.
- No private mortgage insurance.
- A funding fee of 0 to 3.30% of the loan's total value is paid to the VA (this fee may be financed).
- When refinancing, veterans may borrow up to 100% of their home's reasonable value.
VA Guarantee Limits
The VA does not impose a maximum amount that a veteran may borrow using a VA Loan. However, there are limits on how much of the loan the VA will guarantee. As of January 1, 2010, that VA guarantee is $417,000 in most U.S. counties, and may be up to $1,094,625 in certain high-cost counties in some states (including California, Colorado and Washington). Please contact The Kahn Team to learn more about VA Loan Limits in your county.
VA STREAMLINE REFINANCE
VA Streamline loans allow Veterans to refinance quickly, often with no appraisal and no credit check.
The VA Streamline Program offers many benefits to veterans looking to refinance their VA Loan. VA Streamline Refinance Loans allow veterans to lower the interest rate and reduce the monthly payment amount on their current VA loan. Unlike some mortgage refinance products, VA Streamline Loans require little paperwork and typically go through very quickly. When borrowers refinance using the VA Streamline, the new loan will continue to be guaranteed by the Department of Veterans Affairs.
Important details of the VA Streamline Refinance:
- The original mortgage being refinanced must be a VA insured mortgage.
- VA Streamline Loans are also referred to as IRRRLs (Interest Rate Reduction Refinancing Loans) or “VA to VA” refinance loans.
- Unlike FHA Streamline Loans, borrowers do not have to currently occupy the home to be eligible (borrowers must certify that they previously occupied the home).
- The new loan amount may include closing costs, discount points and up to $6,000 in energy efficient home improvements.
- The borrower cannot receive cash from the proceeds of the loan.
USDA LOAN PROGRAM
Designed to help low to moderate income individuals and families in small towns and rural areas achieve home ownership.
USDA Loans are offered by the U.S. Department of Agriculture under the Rural Housing Service (RHS) loan program. RHS loans are available to qualifying low to moderate-income individuals and families in small towns or rural areas. These programs are designed to help people in rural areas achieve home ownership. RHS loans help qualified applicants purchase or repair, or refinance modestly priced homes as their primary residence with no required down payment.
The RHS offers the Section 502 Rural Housing Guarantee Loan Program. In this program, borrowers obtain loans from federally approved private lenders. These loans are guaranteed by the Rural Housing Service. Section 502 loans come with no down payment and low closing costs. Borrowers who have an acceptable credit history, earn up to 115% of the Area Median Family Income, and are unable to find a loan elsewhere may qualify for this program. Qualifying borrowers must also be able to afford the monthly payments and must currently be without adequate housing. Under the Rural Housing Guarantee Loan Program, borrowers may take out a mortgage lasting 30 years.
FIXED RATE MORTGAGE
Fixed rate mortgages lock in the interest rate for the term of the loan; typically the shorter the term, the lower the rate.
The advantages of a 30-Year Loan over a 15-year loan are lower monthly payments and the borrower may qualify for a higher total loan amount.
The borrower can buy a primary home with a fixed mortgage loan for as little as 5% down, which would allow the borrower to refinance up to 95% of the home's total value. To conform to federal guidelines, the loan amount is restricted to between $25,000 and $417,000 (as of Jan. 1st, 2010) for single family homes in most counties. Conforming fixed-rate mortgages are available for homes costing over $417,000 in some high cost counties. In other counties, larger loans usually fall under the non-conforming Jumbo Loan classification.
In a fixed-rate fully amortizing loan, the loan is paid in full at the end of the term. In the early period of the mortgage, a large percentage of the monthly payment goes toward paying the interest on the loan. As the mortgage is paid down, more of the monthly payment is applied toward the principal.
One of the advantages of a fixed-rate mortgage is inflation protection. Locking in at a fixed rate ensures that the mortgage and the mortgage payment won't be affected if interest rates increase. This is can be a significant benefit over other loan types if the borrower plans to own the home for 5 or more years.
Another significant advantage is long-term financial planning. With a fixed mortgage, the monthly payment will remain the same for the entire term of the mortgage. Knowing what the housing costs will be can help the borrower plan for other expenses and long-term financial goals.
Fixed mortgages are popular with first time owners because they offer stability, even if interest rates fluctuate. The mortgage payment will not change if interest rates rise.
ADJUSTABLE RATE MORTGAGE (ARM)
These loans offer lower initial payments, after that, mortgage payments are periodically adjusted - usually annually - based on market indexes.
In an Adjustable Rate Mortgage (ARM), the interest rate on the mortgage is adjusted periodically to keep the rate in line with the market. With most ARMs, borrowers lock in to a fixed rate for the initial period of the loan, often 5 years. Rates are adjusted annually thereafter.
A number of different indexes are used to determine how much the rate is adjusted. Under typical ARM terms, the bulk of the adjustments are made in response to changes in the LIBOR index or Treasury Bill index. ARMs often allow individuals to purchase a home with as little as 5% down.
Borrowers who choose Adjustable Rate Mortgages are protected by a "ceiling." This is a cap on the maximum interest rate, which can be reset annually. The maximum and minimum monthly payments are usually also capped. ARMs typically begin with more attractive rates than fixed rate mortgages. These low initial rates are offered to compensate for the risks of future market fluctuations.
Choosing an Adjustable Rate Mortgage can be a good idea when fixed rates are increasing or if the purchaser intends to keep the home for less than 5 years. ARMs are available with many different types of terms and options. To compare two Adjustable Rate Mortgages, or to compare an ARM with a fixed-rate mortgage, it’s necessary to understand the indexes, margins, caps on rates and payments, amortization, and recasting of the loans involved.
The interest rate on Adjustable Rate Mortgages will increase and decrease based on publicly published indexes. Indexes used to calculate ARM interest rates in the U.S. include London Interbank Offering Rate Index (LIBOR) and United States Treasury Bills (T-bills).
These loans exceed the statutory limits placed by Fannie Mae and Freddy Mac, used for larger purchases.
Jumbo Loans are mortgage loans that exceed the maximum conforming loan amounts as established by Fannie Mae and Freddie Mac guidelines. Jumbo Mortgages are used for the purchase of more expensive homes and high-end custom homes. The guidelines for the loan amount that constitutes a Jumbo Mortgage vary from county to county.
Interest rates on Jumbo Loans are usually higher than conforming loan rates because the lender is assuming greater risk. The interest rates on Jumbo Mortgages are typically between 0.25 and 0.5% higher than conforming mortgage rates, but they can vary outside of this range depending on the location of the home and the market. Most Jumbo Mortgages offer a choice between fixed and adjustable rates. Most lenders will also prefer a larger down payment, but in some cases Jumbo Loans are available for as little as 10% down.
More Information on Jumbo Mortgages
- Any loan above the conventional conforming loan limit
- Most Jumbo Loans are 30 year fixed mortgages or ARMs
- Loan limits depend upon where your home is located
- In some counties, any loan over $417,000 is considered a Jumbo Loan (as of the 2010 guidelines)
- 125% of the median home value in the metropolitan area is the confirming limit in many high cost counties (up to $729,759)
- Jumbo Mortgage rates are also dependent on where your property is located
- Some Jumbo Loans allow buyers to refinance up to 85% of a primary home's value
- Purchasers may buy a home for as little as 10% down under some Jumbo Loan terms
- Payments on Jumbo Mortgages can be made early without penalties
A combination of both fixed rate and adjustable rate mortgages; interest rates are fixed for a predetermined period, then become adjustable.