Home Loan Options

Conventional Loans

 

If you are looking for a mortgage with a wide selection of terms and competitive rates, conventional loans may be your answer. These loans are what most people think of when it comes to a traditional home loan. Conventional Home Loans are not part of a government-sponsored program, and are instead fully funded and insured by private lenders and insurers.  Typically, conventional loan rates are higher than government-backed loans like FHA, VA, and USDA loans.

 

Basic Conventional Loan Requirements

 

Ultimately, lenders individually decide who is and is not approved for a loan. Borrowers should be prepared to supply at least two years of W-2’s, tax statements, bank statements and proof of cash reserves and submit to a credit report.

Clients should have good or better credit – at least a 620 or higher, and a low debt to income ratio.

For many conventional loans, a 10% or 20% down payment is required.  However, depending on your credit and work history, our preferred lenders can sometimes get you a conventional pre-approval with less than 20% down.  Some conventional loans only require 3%-5% down.  BUT if you put less than 20% down, you will have to pay Private Mortgage Insurance to the bank, which protects the bank if you default.  That’s why it’s critical to speak with a lender who knows the different options available – not all lenders are created equal!  And if you find an interest rate online that appears too good to be true, then it means that your closing fees will likely be very high to offset that lower rate.

 

FHA Loans

 

FHA loans are an awesome option when it comes to home financing. They have great benefits, such as a minimum of only 3.5% down payment. These non-conventional loans are secured by the Federal Housing Administration and are funded by private lenders.

 

Basic FHA Loan Requirements

 

FHA loans are a much more accessible financing option with lessened requirements and added benefits such as:

  • 580+ Credit Score
  • 3.5% Down Payment (Compared to higher down payment for most conventional loans)
  • Typically lower interest rates (Compared to conventional loans)
  • The ability to have some or all closing costs covered by the seller or the lender.

 

Other Loan Types

 

If you would like to make repairs to your existing home, FHA also offers 203(k) mortgages for home repair.  This allows you to buy a home that needs work and have the bank pay for renovations. This is not for investments, but for properties that you will occupy as a primary residence.

DSCR (Debt Service Coverage Ratio) Loan is a loan that is for investment properties such as rentals. This type of loan requires a credit check and an analysis of the potential rental income for the property for approval. You do not need to show your income because the rental income will pay the mortgage. You will of course still need at least 20% down for the mortgage, but this is great if you want to build wealth through investment properties.

Fix and Flip Loans are for pure investors that want to buy depressed properties and hold them until they can renovate and “flip” them or resell them.  Very few lenders offer these types of loans because of the risk involved.  But if you’re ready to make the move into investment properties, our team can help guide you through the process.

 

Preferred Lenders…shop around to get the best rate

 

Did you know that a credit inquiry for a mortgage has very little effect on your credit score? Contact the following preferred lenders for a pre-approval:

Steven Furdock

F5 Mortgage (NMLS# 376017/Broker# 1938115) Phone: 231.201.9724

Ryan Christianson

Cross Country Mortgage (NMLS# 831908) Phone: 215.313.6154