Making Preparations – Are You Ready To Purchase Your New Home?
Home ownership is one of the greatest financial decisions of your life. At times, this can seem a bit overwhelming. At Northern Ohio Investment Company we want to make sure your time with us is stress-free, communicative, and as seamless as possible. Our Loan Officers have the skills and knowledge to answer all your questions about financing options and the pre-approval process. At NOIC, we take a unique approach in providing the best customer service available. From your initial application to funding, we’re here to guide you through the process of owning your own home.
- Conventional Loan
What is a Conventional Loan? A “conventional mortgage” simply refers to any mortgage loan that is not insured or guaranteed by the federal government. A conventional mortgage adheres to the guidelines set by Fannie Mae and Freddie Mac.These loans may be conforming or non-conforming, with the former meeting the standards set forth by government-sponsored enterprises Fannie Mae and Freddie Mac. One major factor that determines whether a mortgage is conforming or not is the loan amount – loans over the conforming loan limit (typically anything over $417,000, depending on where you live) are considered jumbo mortgages and will come with a higher mortgage rate as a result.Conventional loans can be either Fixed or an adjustable rate. Fixed-rate mortgages have a set interest rate for the entire length of the mortgage term which can be between 10 and 30 years. An adjustable-rate mortgage (ARM) has a term of 30 years with a low introductory rate for a fixed period followed by periodic adjustments.
- FHA Loan
What is an FHA Loan?An FHA loan is a mortgage loan that is insured by the Federal Housing Administration (FHA). The FHA does not provide the loan, but rather insures the loan for the lender.
The FHA was formed in 1934, and joined the Department of Housing and Urban Development in 1965. The FHA has insured more than 33 million home mortgages since it inception.
One of the benefits of an FHA-insured loan is low mortgage rates and low down-payment. For single-family homes, you could expect your minimum down-payment to be around 3.5%, making easier it possible to afford. The FHA can also help home buyers finance their closing costs, and even offers mortgage insurance.
Currently, any FHA borrowers must have mortgage insurance for the life of the loan. Conventional loans only need mortgage insurance until the borrower has at least 20% equity in the property.
- VA Loan
What is a VA Loan?The VA home loan program was created in 1944 when the Servicemen’s Readjustment Act added a package of benefits to eligible service members. It is administered by the US Department of Veterans Affairs (VA). The VA does not actually lend money; it reimburses VA mortgage lenders if borrowers default on VA home loans. They also establish the rules for those who may qualify, as well as dictate the terms of the mortgages offered. Because this greatly reduces the risk to lenders, VA loans are widely available at reasonable cost. VA mortgage borrowers can take advantage of a number of different VA loan programs, including:
- Build a single family home
- Buy a single family home, a condominium unit in a VA-approved development, or a co-op unit
- Repair, renovate or upgrade your primary residence
- Refinance a mortgage
- Buy a manufactured home and/or lot
- Make energy-efficient improvements like solar heating or cooling systems
The great thing about VA loans is that they offer up to 100% financing (to eligible veterans and their families, when applicable) on the value of a home. To qualify for a VA loan, borrowers must present a certificate of eligibility, which establishes their record of military service, to the lender.
- Renovation Loan
What is a Renovation Loan?A renovation loan (also called a 203k), is an all-in-one mortgage loan and remodeling loan financed under one institution. There are many different types of renovation loan programs to fit the buyers needs.
Renovation Loan Programs
HOMESTYLE®: This is a standard rehab program for conventional loans. With this program you can perform all of the same renovation as with the FHA 203k but without all of the limitations. This loan contains one application, one closing, and one set of fees. In the end all of the costs may be financed (up to 95% loan to value).This is also a great loan for current homeowner’s looking to remodel their home, add landscaping, a pool, update the AC/Heating unit, etc.
HOMEPATH®:Fannie Mae offers special mortgage financing on their foreclosed properties to help buyers with necessary rehab work. The mortgage loan is called the Fannie Mae HomePath and the renovation loan is called the Fannie Mae HomePath Renovation loan. We have been closing a lot of HomePath loan recently. Investors like them because HomePath is quite possibly the only loan on the market that doesn’t require them to put at least 20% down.
FHA 203K FULL: The FHA 203k loan in Ohio allows buyers the ability to finance major or minor upgrades on a new home without having to take out separate short term or risky mortgage loans. How many times have you viewed a property and wished you could replace the carpet or update the kitchen? Or maybe you wish to purchase a HUD owned home or a foreclosed property which will require repairs before you can occupy the property. With the 203k loan you may and finance the costs and custom design your dream home. This is also a great loan for sellers and Real Estate Agents wishing to market homes to potential buyers with limited disposable cash.
FHA 203K STREAMLINE 203K(s): If you’ve been passing up buying a home in Ohio because it requires cosmetic repairs, FHA has a special (203K Rehab) mortgage program that provides funds for repairs and/or upgrades. Not to be confused with FHA’s full 203K program, a Streamlined 203K loan eliminates much of the paperwork and simplifies the process to obtain rehab funds. The primary function of the streamline 203k is to aid with those cosmetic or minor repairs.
- OHFA Loans
What are OHFA loans?The Ohio Housing Finance Agency (OHFA) facilitates the development, rehabilitation and financing of low- to moderate-income housing. The Agency’s programs help first-time homebuyers, renters, senior citizens, and others find quality affordable housing that meets their needs.
OHFA offers affordable housing opportunities for Ohioans including first-time homebuyers, renters, senior citizens, and other populations with special needs who otherwise might not be able to afford quality housing.
First-Time Homebuyer Program
OHFA offers a variety of products under its First-Time Hombuyer Program that can assist Ohioans with purchasing a home.
OHFA’s First-Time Homebuyer program offers several loan products for buyers based on their needs. Products that fall under the First-Time Homebuyer program include:
- Target Area Loan product
- Ohio Heroes product
- Down Payment Assistance (up to 2.5% of the purchase price)
- Grants for Grads product
- Mortgage Credit Certificate product
- 203(ks) Loan product
To learn more about OHFA and the mentioned programs and how you can take advantage of them, contact a Concord Loan Officer today.
- Reverse Mortgage Loan
What is a Reverse Mortgage?A reverse mortgage is a very handy tool that can be utilized by anyone who is 62 or older. In order to qualify for a reverse mortgage, the individual who is applying must owe little to nothing on their home, since the reverse mortgage allows the individual to take the equity that they have put into the home in order to pay for any emergency expenses such as home repairs, medical expenses, or any other large bills that may come up.
How Do You Qualify?
In order to qualify for a reverse mortgage, the home that you are taking a reverse mortgage out of must be the primary residence, and you cannot be behind on your property taxes and home insurance fees. Any and all repairs that the home needs must be completed, meaning that a reverse mortgage cannot be taken out if any major repairs need to be completed.
You do not have to pay back the loan as long as the home that the reverse mortgage was taken out on is still your primary residence, meaning that your overall income and credit score do not matter when qualifying for a mortgage of this type. However, you must be able to prove that you will continue maintaining the home and property after the equity has been taken out.
To learn more about our Reverse Mortgage loan program, contact a Concord Loan Officer.
- Jumbo Loan
What is a Jumbo Mortgage?A jumbo mortgage is a home loan with an amount that exceeds conforming loan limits set by the office of Fannie Mae and Freddie Mac, the two government-sponsored enterprises that buy mortgages from lenders. Therefore, they are not eligible to be purchased, guaranteed or securitized by Fannie Mae or Freddie Mac and needs financing by companies which are not directly government backed. The limit is $417,000 in most parts of the United States, but can be as much as $625,500 in other highest-cost areas.
The interest rate charged on jumbo mortgage loans is generally higher than a loan that is conforming, due to the higher risk to the lender; however, as of more recently, not by much. The spread, or difference between the two rates, depends on the current market price of risk but is typically between 0.25 and 0.5%, making Jumbo Loans more affordable than they have ever been in the past.
Benefits of a Jumbo Loan:
- Borrowers can obtain financing in amounts up to $2 million
- Only have to deal with one lending institution
- No private mortgage insurance requirements
- Tax benefits gained by deducting interest payments (on loans up to 1 million dollars)