The Most Popular Types of Mortgage Loans
At High Quality Mortgage we offer an array of mortgage products to suit the needs of any and all of our clients.
First Time Homebuyer
Special programs may be available to you if you are a first time home buyer. This is currently this defined as, “not holding interest in primary real estate property for the most previous three year period.” These programs may offer decreased down payment eligibility and special grants, and include government programs as well. They are beneficial by allowing you to keep money in the bank, increasing your borrowing power and giving more flexibility in underwriting guidelines.
Maximum Loan Amount
15 or 30 Year
A conventional loan is any type of mortgage that is not secured by a government-sponsored entity (GSE), such as the Federal Housing Administration (FHA) or the U.S. Department of Veterans Affairs (VA).
These loans are also known as “conforming loans” because they meet guidelines or “conform” to the rules set forth by Fannie Mae and Freddie Mac, the two largest investors of conventional loans. The rules they conform to include a minimum FICO requirement of 620.
DTI represents the amount of your monthly mortgage payments and other debts in comparison to your monthly gross income. Total debts usually can’t exceed 50% of your monthly gross income. In certain circumstances, you can have a DTI as high as 50%, but only if you meet Fannie and Freddie’s requirements, including exceptional credit history.
There are two basic types of conventional loans:
Fixed rate:Your mortgage rate never changes over the life of your loan.
Adjustable rate:After an initial fixed-rate period, your interest rate can adjust up or down, depending on the market. This option can save you money if you plan to move or refinance within 5–10 years.
In the past, prospective homeowners were required to put down at least 5% for conventional loans, but a recent program now allows down payments as low as a 1%. With attractive interest rates and the option for a low down payment, a conventional loan is a great option for some buyers.
Maximum Loan Amount
15 or 30 Year
There are several different eligibility requirements you must meet to qualify for VA home loans. If you are not sure if you will qualify, you should speak with a mortgage loan or a VA Loan Specialist. One of the first steps toward getting a VA Jumbo Loan is to complete a Certificate of Eligibility.
You may qualify for a VA Loan if you fall into one of the following categories:
Active-duty Veterans discharged during WWII or later, without the status of “dishonorable”
Active-duty Veterans with at least 90 consecutive days of service during major conflict
Peacetime Veterans and active-duty personnel with at least 180 days of consecutive service
Enlisted Veterans whose service began after 1980, or officers whose service began after 1981, and who have served at least 2 years.
National Guard and selected Reserve members may also qualify.
Check your eligibility with a qualified VA Loan Specialist if you have any questions.
What Can I Do with a VA Home Loan?You can use your VA Loan to purchase a house, condominium, or townhouse. You can also build a home, make energy-efficient home improvements, or refinance your mortgage.
Why Would I Want A VA Loan?There are several reasons why VA home loans may be preferable to standard loans in New Jersey. Most importantly, if you qualify, you may obtain a VA Loan even if you did not qualify for other loans. There may be no down payment required for a VA Loan, depending on the lender. VA Loans often have lower interest rates than conventional loans, and many times you can negotiate the interest rate with the lender. There are no mortgage insurance premiums on VA Loans, and assumable mortgages are permitted. Closing costs can be lower than other forms of financing, and there is no penalty for prepaying your mortgage. In addition, VA assistance due to temporary financial difficulty is available to those who qualify.
No Mortgage Insurance
No Money Down up to $453,100 loan amount
Loans up to $1,100,000 with limited down payment
Easy Qualifying Process
Maximum Loan Amount
15 or 30 Year
The Federal Housing Administration, or FHA, was created in 1934 as part of the National Housing Act. This government agency has made sure that loans made by banks and other private lenders for home building and home buying are insured. The objective of this organization is to improve housing conditions and standards, provide a functioning home financing system, and stabilize the mortgage market. FHA loans are a result of this effort.
The FHA does not set a required minimum credit score in order to be applicable for an FHA loan but instead, each borrower’s credit in considered together. These loans have some leeway, even if you have filed for bankruptcy before, but lenders can implement their own requirements on top of those already in place. For example, some may require a minimum credit score.
Since 2005, the FHA loan Program has seen a 900% growth. Some key changes have been made, making it more popular than it has ever been. FHA maximum loan limits have been raised across the board and housing prices are in a slump. This means that a higher percentage of homes qualify for FHA financing than ever before!
These FHA Loan requirement changes mean millions more can now qualify for an FHA Loan, one of the best choices for prospective home buyers in today’s mark
Important Information about FHA Loans:
3.5 percent down payment of the purchase price Low monthly mortgage insurance Low, government-capped closing costs Relaxed credit score requirements Quicker qualify post-bankruptcy FHA Loans Allow For Blemished Credit History:
In today’s tight lending environment, an FHA is often the best choice for borrowers with past credit issues. Most borrowers find it is a lot easier to apply for an FHA loan. Borrowers can have lower FICO scores, some blemishes on credit and don’t need to put as much money down.
Lower FICO scores are accepted FHA loans require 2 years waiting period between bankruptcy, 1/2 the time as a regular loan FHA loans require 3 year wait period after foreclosure, as opposed to the 4 for a regular loan
Allows for Blemished Credit
Adjustable Rate Mortgage (ARM)
These are loans that are insured by the FHA, or Federal Housing Administration. Generally, most people can qualify for an FHA loan, with the two requirements being a social security number and a valid state driver’s license. These programs allow for lower down payments, higher debt-to-income ratios, and more flexible credit package underwriting guidelines. Offered are fixed and/or adjustable rate mortgages, which tend to remain competitive with the conventional market. However, they do have limitations as to maximum loan size, which can vary by county, and occupancy must be owner-occupied.
Maximum Loan Amount
Up to 100% of equipment value
Expected life of equipment
Jumbo & Super Jumbo Loans
Any loan up to $453,100.00 in New Jersey is considered conforming to the conventional loan limits. In certain high-cost counties, like Bergen and Essex you can actually go up to $679,650.00 . Jumbo loans are considered to be ones that are above this threshold and a super jumbo loan would be in the $10-$20 million dollar range.
These loans, above $453,100.00 and $679,650.00 respectively, are not backed by Fannie Mae or Freddie Mac, and will carry with them higher interest rates due to the increase in risk. At this level, you will be working with many private lending institutions who portfolio their loans (lend their own money) in an effort to earn your business.
You have searched the MLS and been to 100 open houses. You have seen every floor plan available in the neighborhoods you want. You even do the extensive research to make sure you are being offered the best price for the home. These are great and effective ways in going about your next home purchase, however none of these options are more rewarding then having the home built exactly the way you want it. Construction loans will be something you will want to explore.
A Construction loan will give you the funds you need to build your home, the way it was intended to be, exactly the way you want it. From initial builder plans, to purchasing the land lot, there are many steps in the Construction loan process that you need to pay attention to.
Here are some basic steps to give you an overview of how a construction loan works.
Buyer meets with architect to get plans to build for the home Buyer acquires Land Lot usually through financing or cash. Plans are given to General Contractor to build home Loan is given to buyer based upon LTC, or Loan To Cost -Loan is Usually a 6, 9 or 1 year term in an effort to give the General Contractor enough time to build. After the construction loan, you will get your permanent financing issued. This usually is a onetime close, where you do not have to go through the pre-qualification process again, and pay another set of closing costs.
The amount of money to build the home in relation to what it is worth. For example, an LTC of 80%, means that the home lender will lend 80 %.
A $500,000 appraised home that costs $400,000 to build will have an 80% LTC. In this scenario, the borrower is taking advantage of the low costs of wholesale construction, and can actually move into the home, if built correctly and on time, into an equity position.
Lower Rate Mortgage RefinanceThis mortgage refinance is designed to lower your interest rate.
Term Home RefinanceThis refinance is designed if you want to lower or increase your loan term. These usually are in increments of 15, 20, and 30 year fixes. You might decide you want to pay your mortgage off early, and that might incline you to pursue a 15-year fix versus a 30-year fix. You will save thousands upon thousands choosing this option
Cash Out RefinanceThis refinance is designed to either take cash out of your home through the existing equity, or to consolidate high-interest rate credit cards, or maybe to do some home improvements.
Reverse Mortgage RefinanceThis refinance utilizes the equity in your home through the bank, as a way for you to receive monthly income, and to never have to make a mortgage payment again. You need to be at least 62 years of age for this mortgage, and you will be required to go through a class to see a counsellor so you are 100% properly advised in how this program works.
FHA Streamline RefinanceThis is a no closing cost refinance that pays off your existing FHA loan. A great loan, in a low interest rate environment.
HARP 2.0 RefinanceThis refinance is designed for homeowners who may have not been able to refinance in the last couple of years, due to low or negative equity. An amazing program that has helped millions of homeowners nationwide. View additional HARP 2.0 Refinance information.
FHA 203K RefinanceThis refinance is designed to give you additional money to rehab your home, based upon the future appraised value of the project at hand. A great way to lock in a low interest rate, and bundled it with the existing mortgage, all under one loan.
VA Streamline RefinanceSimilar to the FHA Streamline Refinance. Little to no closing costs, and works in a low interest rate environment. No appraisal is needed. No income verification is needed either.
The above are just a couple of the many refinance programs we offer. We also offer USDA, Jumbo, 1031 Exchanges, Investment Properties, and Construction Loans.
Divorce is an ugly word, however, certain steps need to be taken so that both you and your departing spouse can both go on with your lives. Refinancing off your departing spouse is vital for both of you to move on. Here are some steps you can start taking now to ensure that the refinance is not a difficult one.
Make sure your departing spouse is on the loan and the title. If only on the title, then you will not need to mortgage refinance. You can simply do a quit claim deed from a notary, deeding her/him off the property. Have your separation agreement in writing and fully executed and signed, so the new lender can see exactly who is getting to keep the home. Decide exactly how much equity (cash), if any you are going to give your departing spouse, a document that in the separation agreement. If you are getting divorced in addition to getting separated, then we will need a copy of the signed divorce decree as well. Matthew D. DiBrino is a former practicing matrimonial attorney and is well versed in the mechanics of this type of transaction. This will ensure that your refinance goes smoothly without any unexpected hiccups.
HARP LoansHere are some key points for the Government Rehabilitation Loan Program, A.K.A. Home Affordable Refinance Program, Obama Government Refinance Assistance, or Underwater Government Loan Assistance.
Must have refinanced or purchased prior to May 31st, 2009 Little to no upfront costs, no appraisal needed Unlimited Loan to Value Limited documentation needed (as little as 30 days of paystubs) Refinance to rates as low as 3.99% No mortgage insurance unless already have Ability to skip next 2 mortgage payments. FHA 203K Home Improvement Purchase or Refinance
With an FHA 203k loan can I remodel or improve? Yes, any or all of the following:
Paint Repair a kitchen Add a deck or patio Insulate for greater energy efficiency Replace flooring i.e. tile, carpet, etc. Add a bathroom, replace a bathroom Finish a basement Replace windows (for which you can get a nice energy credits well) Replace Appliances i.e. stove, furnace, and water heater energy credit Add central air (again energy credit here) And Much More Minimal Down Payment and Closing costs:
Down payment less 3.5% of Sales Price Gifts are allowed Seller can credit up to 6% of sales price towards closing and prepaid costs. No reserves required. FHA regulated closing costs What can’t you do with an FHA203k mortgage loan?
Put in a pool or an ice skating rink Add a Theater Room and all the equipment (you could get away with the room) Any other Luxury item, such as gold plating the baseboards Putting in a yard So what do I have to do to get one of these FHA 203k loans?
There are some hoops to jump through to qualify:
Owner/occupants only no flipping or investors (and no you don’t have to be a 1st time home buyer to qualify) The house must have been completed for at least 1 year, no new construction houses, sorry You will need to have 2 appraisals (one for the as-is value now and one for the projected value once the work is completed) You must identify the repairs and work to be done, and have a written estimate of materials and labor by a licensed contractor and an interior plan of the home. Repairs and addition must have the proper permits, inspections and be done to code And most of all..you must be able to qualify for the finished product (cost of house + rehab money), so you can’t buy that million dollar fixer upper folks, sorry..well unless you can afford that million dollar home. You must still have your 3.5% percent down payment for the entire purchase price (home + rehab money). ALTERNATIVE Lending Products
If you do not qualify for Conventional or FHA/VA loan product due to a recent unforeseen event, then we do recommend you take a look at our suite of alternative lending products that will help you qualify for your new home purchase.
We understand bad things can happen to good people, so we have created the following lending options for the following types of scenarios and borrowers.
FRESH STARTOur FRESH START mortgage program is designed to help lend to borrowers who have had a recent short sale, foreclosure, or a bankruptcy. Typically if any of these events happen to you, there is a 2-4 year waiting period from the discharge date or sale date, to obtain a new mortgage using conventional or FHA financing.
Some of the Loan Features of FRESH START include:LTV up to 85% with no Mortgage Insurance Minimum Credit Score 580 DTI Ratios greater then 50% considered Up to $350,000 cash back on refinances
BANK STATEMENT PROGRAMSFor most self employed individuals and small businesses, everything is usually being expensed, so while you know your business and bottom line is profitable, when it comes time to look at the actual tax return, a lot less is being reported, which poses a problem for traditional mortgage financing.
With our BANK STATEMENT Program, we can use 12-24 Months of your personal or business deposits to come up with a qualifying income for you. This really takes away a lot of the stress with these types of borrowers because they can qualify off of the deposits.
Some of the Loan Features of BANK STATEMENT PROGRAM include:
50% of business deposits used to qualify 100% of personal deposits used to qualify LTV up to 90% Loan Amounts up to $1,000,000
Mortgage After ForeclosureHow long after a foreclosure can I get a mortgage?
It may not be as difficult as you think to get a mortgage after foreclosure in New Jersey. The waiting period varies depending on the type of loan. For FHA loans it is typically 3 years, conventional loans through Fannie Mae of Freddie Mac are 5 years, and VA loans can be achieved after 2 years. This will be public record, so any title company can pull up this information and give to your mortgage broker or lender.
However, there are some exceptions that can get your qualified without having to wait the entire 3 years.
In this article we will provide helpful information on:
Getting a mortgage shortly after a foreclosure FHA, Conventional, and VA Loans after foreclosure What you need to do to get approved after foreclosure Short sale vs. Foreclosure Rebuilding your credit Ways to get a mortgage shortly after foreclosure
Using a private / hard money loan
If for some reason you want to buy a home way before that 3 year anniversary, and have at least 35-40% to put down on a home, I would suggest a private money or hard money loan. This is a short term loan of 5 years, however, it would give your foreclosure time to season, and you would be able to refinance into a better loan.
Prove Extenuating Circumstances
If you can prove that the foreclosure was a result of extenuating circumstance then you might be able to get approved for a mortgage without having to wait the full 3 years. Examples of these unfortunate circumstances include:
Serious Illness / Medical bills Significant income loss due to loss of a job Natural disasters FHA Loan requirements following foreclosure
FHA loans are backed by the government and typically require a 20% down payment. A typical minimum credit score is 620. Therefore, to get approved for an FHA loan you will need to do the following:
Build your credit score up to a minimum of 620 Save enough money for a 20% down payment Wait three years from the date your foreclosed property was sold Conventional Loans After a Foreclosure
Conventional loans that are backed by Fannie Mae or Freddie Mac typically have a longer waiting period of around 7 years. There are also exceptions to this time period by proving you or your family experienced extenuating circumstances that caused your foreclosure. With both Fannie Mae and Freddie Mac you will need to:
Wait 5 years after the date the foreclosed property was sold Rebuild your credit score to at least 620 provide documentation of the official date your foreclosure was sold
VA Loans after a foreclosure
VA loans can be a great option for for those who have earned the right to apply by serving in the military. These loans can be achieved with a credit score of 620 and above and in most cases with no down payment. It is possible for someone to be approved for a VA loan following a foreclosure and with less of a waiting period of two years. For those who qualify, a VA loan can be a great option because of their flexible requirements.
What you can do to get approved after foreclosure
Understand the affects on your credit score
A foreclosure will have a negative impact on your credit score for 7 years unless you are able to successfully file a dispute to have it removed. Typically the higher the credit score the more of an impact it will have. A score of 680 will see a drop of around 100 points while a 780 score will get hit by an average of 150 points. Get more information on the full impact on your credit score.
Re-building your credit after foreclosure
Right away it is important to take advantage of the free credit report you are entitled to from the major credit bureaus. Start monitoring it right away. Understand the timeframe for a foreclosure to be cleared from your credit report. The foreclosure will most likely be on your report for 7 years but that does not mean you cannot build your score up to the critical 620 threshold.
As mentioned above, when you go through a foreclosure your credit score will drop quite a bit. Things you need to do to improve your score include:
Pay all of your bills on time Open a low limit credit card and keep the balance under 29% Do not take on too much new debt Understand how your credit score will affect how much your mortgage will cost
If you build up your credit score enough and meet the lender requirements (depending on the type of loan you are applying for) then you need to understand how much your mortgage will cost. Lower credit scores will most likely mean higher interest rates costing you thousands over the life of the mortgage. Therefore, it might make sense to wait until until the foreclosure is cleared from your credit report, giving your a higher credit score, and therefore giving you a much better interest rate.
Can the bank verify your foreclosure?
If you think your foreclosure was mismanaged by the lending bank then you might be able to get the foreclosure cleared from your credit report. If the bank cannot provide all of the correct and required legal documentation you might be able to get the foreclosure removed permanently from your credit report. If you think you have a valid case then consult a law firm specializing in this area. You will need to file disputes with each credit bureau and it needs to be a well documented case. Once you have submitted the disputes then use your free annual credit report monitoring services to keep an eye on the status.
Short Sale vs Foreclosure
There is a difference between a short sale, often regarded as “paid in full for less than the full balance”, and a foreclosure. While they both have a huge negative impact on your credit, the short sale will have a slightly less of an impact. A foreclosure will result in the bank taking back ownership of the property and then bringing it to an auction. A short sale is when the house is sold before the house is foreclosed upon for a lesser amount than what is owed to the bank. Both cases will most likely affect your credit score for 7 years.
Foreclosure as a result of bankruptcy
Getting a mortgage after bankruptcy is similar in some cases since a foreclosure might be the result of the bankruptcy. Re-building your credit score, saving money, and shopping for a loan that works best for you is vital in both cases.
It is possible to get a mortgage shortly after you have experienced a foreclosure. Extenuating circumstances and a hard / private money loan are two ways to get one before the required waiting periods required by most lending programs. For FHA, Conventional, or VA loans you will be looking at a 2 – 5 year waiting period as long as you meet that programs other requirements.
INVESTMENT PROPERTY LOANS
Investment property loans can be an exciting thing to explore because it can give you cash flow for years to come if you invest smartly. The following are the different property types with regards to investment properties that we at Marketplace Home Mortgage can help you get financed with. Purchase and Refinance:
Single Family Residence Condo Townhome 2-4 Plax If you have already purchased an investment property recently, and are in the middle of rehabbing it, we can assist with the permanent loan right after the rehab is completed, and go off of the future appraised value. We can even count future rents in your Debt To Income Ratio.
Mortgage After BankruptcyYes, you can get a mortgage after bankruptcy. Here are a few circumstances depending on your situation:
At the two-year discharge date of your CH 7 bankruptcy under FHA guidelines, and within 2 years for a VA loan under certain, extenuating circumstances. For a CH 13 discharge, which is basically a reorganization of debt, we can get you financed after 11 payments of your new payment plan, and with trustee approval. If you are putting a large enough down payment, you can get a private money loan, aka hard money loan. If the bankruptcy was not your fault then you could get qualified within 12 months if you demonstrate financial responsibility. In today’s new economy, many of us have emerged from a financial crisis due to many different reasons. The Housing Crisis of 2008, starting a business only to have it ultimately fail, a medical illness of a spouse or loved one, etc… Despite what you may have heard loans after bankruptcy are possible.
Let’s have a look at the types of mortgages and the requirements for securing one of these loans after bankruptcy.
Difference between Chapter 7 and Chapter 13 Bankruptcy
The requirements for getting a mortgage after bankruptcy are different depending on the type.
Individuals, partnerships, and corporations can seek relief under chapter 7. This will discharge most of the debts to give the individual or company a fresh start. Keep in mind some types of debts are NOT discharged. Examples include taxes, student loans, and child support. Under this type of bankruptcy the non-exempt assets are liquidated by the trustee in order to help pay back the creditors. There is no repayment plan to the creditors created under this type of filing.
Typically it will take 4-6 months to get your debts discharged. This is important because when you apply for a loan the waiting period usually begins with the discharge date, not the filing date.
This type of filing is considered a reorganization of debt and allows the individual or company to set up payment plays with the creditors to catch up on late or missed payments. The payment plans are usually based on a 3 – 5 year plan. Under this filing debtors can prove their financial responsibility by making on-time payments to the creditors. This can help them qualify for a mortgage in less time with most mortgage programs. Typically if they can make on-time payments for 12 consecutive months, plus meet other requirements, then they have a chance to get approved for a mortgage.
VA Loans After Bankruptcy
Following a chapter 7 bankruptcy the a borrower much maintain a clean slate and make on time payments on all of their bills in order to be considered for a VA home loan. They will also need to get their credit score up to a minimum of 530. Two years is also the minimum waiting period, unless of course you can show that the bankruptcy was due to “Extenuating Circumstances”.
Getting qualified for a VA loan after chapter 13 bankruptcy is similar to other loan types. You must demonstrate you can make on-time payments to your creditors for 12 consecutive months, maintain a credit score between 530 and 640, and prove that taking on new debt will not inhibit their ability to make on-time payments to the creditors.
FHA Mortgages After Chapter 7 Bankruptcy
Here are some basic guidelines for qualifying for a mortgage after chapter 7 bankruptcy:
2 year minimum waiting period from the time the bankruptcy was discharged Establish financial responsibility by building up a savings account Build up your credit Demonstrate you can pay bills on time every month More information on the requirements and guidelines can be found at www.FHA.gov The one exception to waiting 2 years for an FHA loan is if you can prove that the bankruptcy was out of your control. Examples of this include natural disasters, medical issues, etc…
Conventional Loans after Bankruptcy
Typically after a chapter 7 bankruptcy you will need to wait 4 years to qualify for a conventional loan. In 2015 Fannie Mae reduced the waiting period from 4 years to 2 years. Freddie Mac still requires a longer time period. Because these are NOT insured by the federal government there is typically a longer waiting period for conventional loans when compared to FHA loans as noted above. Even after the chapter 13 filing it typically requires the applicant to demonstrate 2 years of on-time payments to their creditors.
Securing a USDA mortgage post-bankruptcy
A USDA mortgage has a little bit longer minimum waiting period if you have filed for a chapter 7 bankruptcy. They require at least three years. Again, “Exceptional Circumstances” might make it possible for you to qualify for a mortgage in as little as 12 months. These circumstances need to be proven to the court and that they were out of your control.
As for a chapter 13 bankruptcy, which is more of a re-organization of debt, you can demonstrate that you are able to make 12 consecutive months of on-time payments. In addition, you will have to prove to the court that taking on the new debt will not hinder your ability to continue making payments to the creditors.
Steps you can take
Monitor Your Credit
After bankruptcy you are allowed free credit monitoring for one year from each credit bureau. You should take advantage of this service and make sure that none of them are reporting your previous debts as unsettled or delinquent. Do not sign up for a service that requires any form of payment. These services will typically start charging you after 1 month.
Build up Your Credit Score
Surprisingly, you will get lots of offers from credit card companies after your bankruptcy. It is a good idea to sign up for a low limit credit card. Use the credit card and pay off the balances. If you don’t pay off the balance be sure to keep the balance under 29% of your limit.
Lenders will want to see that you have open lines of credit and are responsible for paying the bills for at least 12 months. This includes things like cell phone bills, cable or internet providers, student loans, etc.
Set Up a Savings Account
When it is time to apply for a mortgage you will need to be prepared to put at least 3% down. In the approval process it will look good to see you have built up some savings. Making regular deposits will help you look more responsible. During the two years you will typically have to wait build up the savings account as much as possible. The larger the down payment you can make the better chance of getting approved and the better the interest rate.
Make on-time payments to creditors
If you have filed for chapter 13 bankruptcy then it is imperative you make on-time payments to your creditors. Failure to do so can result in a failure to secure a loan in the 12 month period. Be sure to make 12 consecutive on-time payments before applying for a mortgage.
Keep an eye on your debt to income ratio
This goes hand in hand with managing your credit score. You will want to minimize your debt to income ration as much as possible, especially post bankruptcy. Piling up the debt is not a good idea, however, you will also want to establish some good credit history. Try to make sure your debt payments each month do not exceed 35%.
For many of us, we think that life after bankruptcy will be this dismal existence where we cannot get credit for 7 years, let alone buy a car, or more importantly, a home for all your husband/wife, and children, if any. While you cannot secure a mortgage immediately after filing for bankruptcy you can follow some steps (many of which are mentioned above) to help you get approved between 2 and 5 years following the discharge.