Confused on anything? Maybe this will help. If not, we’re still here to help.
What Do I Need a Glossary For?
Mortgages and their terminology can be as dense as a science textbook. Hopefully our definitions can give you some direction on what you are looking for. But remember, we’re the nerds. So instead of reading through all of this, how about you contact us and we’ll do the dirty work.
Let a FHA loan help YOU!
FHA loans have been helping people become homeowners since 1934. The Federal Housing Administration (FHA) – which is part of HUD – insures the loan, so WE can offer you a better deal.
- Low down payments
- Low closing cost
- Easy credit qualifying
FHA might be just what you need. Your down payment can be as low as 3% of the purchase price, and most of your closing costs and fees can be included in the loan. FHA loans are available on 1-4 unit properties.
FHA has a loan that allows you to buy a home, fix it up, and include all the costs in one loan. Or, if you own a home that you want to re-model or repair, you can refinance what you owe and add the cost of repairs – all in one loan.
Are you 62 or older? Do you live in your home? Do you own it outright or have a low loan balance? If you can answer “yes” to all of these questions, then the FHA Reverse Mortgage might be right for you. It lets you convert a portion of your equity into cash.
You can include the costs of energy improvements into an FHA Energy-Efficient Mortgage.
What does “Conforming” or “Conventional” mean?
A Conforming or Conventional mortgage loan is a loan that falls within Fannie Mae or Freddie Mac’s criteria and standards for purchase. They purchase about 80% of all conforming loans.
What are the criteria for a conforming loan?
- In 2012, the single family home loan limit is $417,000. A mortgage loan over the limit of $417,000 for a single family would be considered a jumbo loan.
- Debt-to-income ratio limits. Currently that is 45%
- Documentation requirements: employment verification, asset verification, appraisal, title, etc.
Who is eligible for a VA (Veterans Administration) home loan?
- Veterans who served on active duty with a minimum of 90 days of service during wartime or a minimum of 181 continuous days during peacetime.
- There is a six-year requirement for National Guards and Reservists.
- Surviving spouses may be eligible.
What are the benefits of receiving a VA loan, for purchase or refinance?
- You may refinance up to 90% of your primary home’s value.
- A streamline refinance (IRRL) has a reduced funding fee and flexible documentation requirements. Available for current VA loan holders.
- No pre-payment penalties.
- Purchase a home with no money down (primary home only).
- No monthly PMI (upfront funding fee is required on most VA loans).
- Veterans with a disability may be eligible for a funding fee exemption.
What is a USDA loan?
With a USDA loan, you can finance up to 100% for a home purchase or a refinance (must currently have a USDA loan to refinance). These loans are guaranteed by the United States Department of Agriculture (USDA) but are serviced by lenders who meet federal guidelines.
How do I qualify?
- The home must be in a designated rural area. Call us for help with finding out if your chosen property falls within a USDA area.
- The home must be owner occupied. Manufactured or mobile homes do not qualify.
- Must meet USDA adjusted annual income limits. We can help you identify what this means.
- Up to 100% financing.
- Lower mortgage insurance than FHA or conventional loans.
- The program is not limited to first-time home buyers.
- USDA allows for closing cost gifts or seller-paid closing costs.
- No pre-payment penalties.
What is a Reverse Mortgage?
A reverse mortgage is a financial tool to help homeowners 62 and older tap into the potential equity in their homes. It eliminates your current mortgage payment and lets you receive your equity in a variety of ways, all tax-free. Your lender pays you, hence the term “reverse mortgage”.
How do I qualify for a reverse mortgage?
- You must be 62 years or older.
- You must live in your home as your main residence.
- You must have sufficient equity.
What are the details of getting a reverse mortgage?
- Loan closing costs are similar to a traditional mortgage.
- You (or your heirs) will never owe more than what the house is valued at, if you sell the home to pay the balance. If your heirs keep the home, the full loan balance is due.
- You can choose the type of payment; lump-sum, monthly payments or a line of credit.
- You keep the title to your home. You cannot be forced out of your home, as long as your insurance and property taxes are paid and you maintain the home.
- If you hold a current mortgage, the reverse mortgage is typically used to pay off the existing mortgage. This helps increase your available cash if you need it.
What constitutes a Jumbo Mortgage?
A jumbo mortgage is a mortgage loan in an amount above the conventional conforming loan limits set by Fannie Mae and Freddie Mac. In 2012, that limit is $417,000 for a single family home.
A jumbo loan typically has higher rates and fees than a conforming loan.
What is a “Rehabilitation Loan” and what can we do with it?
At it’s most basic, a 203k loan guarantee program can be used to purchase or refinance AND get money to make needed repairs up to the maximum loan limits set by HUD for the county in which the building is located.
The FHA 203k loan program is HUD’s primary program for the rehabilitation and repair of single family properties. Essentially, it is a home improvement loan. As such, the 203K loan is a tool for community and neighborhood revitalization and for expanding home-ownership opportunities.
The measurable value of a home or property above and beyond that owed on a loan. A value upon which many homeowners often borrow.
First Time Buyer
A first time home buyer is anyone that has not owned a home in the last three years. If you bought a home ten years ago and sold if five years ago you are now a first time home buyer again.
Fixed Rate Mortgage
A conventional mortgage that is outfitted with a fixed interest rate over the life of the loan. Monthly payments are the same from month to month.
A legal document between a mortgagor and a mortgagee that establishes a home and/or property as security for a home loan.
Confused? Contact Your Mortgage Nerds and we’ll handle it.