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American Mortgage United Corp will provide Loan Options that are tailor made to individual needs. With our simple and ensuring process we guarantee the buying or refinancing experience is a success.
Make sure to contact us for a free consultation so we can find the best options for you.
Loans guarantee or insured outside agencies like FHA or VA are known as conventional loans adhering to Fannie Mae guidelines. Also known as Federal National Mortgage Association this corporation is created by the federal government buying and selling conventional mortgages setting the maximum loan amounts and requirements for borrowers.
Conventional mortgages include portfolio loans, construction loans, and even subprime loans. When a lender refers to these “conventional loans” they are likely referring to conforming mortgages that are eligible for purchase by Fannie Mae or Freddie Mac.
The process of securitizing mortgage loans and selling them on the secondary market lets banks continue writing loans for real estate. Fannie and Freddie provide that liquidity necessary to purchase mortgages, bundling them with thousands of other similar loans and selling them as bonds under the mortgage backed securities market.
In the United States a jumbo mortgage is a mortgage loan with high credit quality with an amount above conventional conforming loan limits. This standard is set by the two government-sponsored enterprises Fannie Mae and Freddie Mac setting the limit on the maximum value of any individual mortgage purchased from a lender. Fannie Mae (FNMA) and Freddie Mac (FHLMC) are large agencies that purchase the bulk of U.S. residential mortgages from banks and other lenders freeing up liquidity to lend more mortgages. When FNMA and FHLMC limits do not cover the full loan amount, the loan is referred to as a “jumbo mortgage”. Traditionally the interest rates on jumbo mortgages are higher than conforming mortgages but with GSE fee increase Jumbo loans have recently seen lower interest rates than conforming loans.
On 2008 President George W. Bush signed the Housing and Economic Recovery Act of which temporarily increased the jumbo conforming limit in the United States. This limit was raised to the lesser of $729,750 or 125% of the median home value within the metropolitan statistical area. Due to expire by December 2008 the new limits were extended through 2010. Mortgage lenders did not freely adopt these new limits making them essentially “theoretical” as mortgages above the old conforming limit of $417,000 are still attracting higher interest rates.
As of 2010, the limit on a conforming loan in “general” areas was $417,000 for most of the US, apart from Alaska, Hawaii, Guam, and the U.S. Virgin Islands, where the limit was $625,500. The limit in “high cost” areas was $729,750 and $938,250 respectively.
On October 1, 2011 the jumbo conforming limit of $729,750 in “high cost” areas was reduced to $625,500.
A FHA insured loan is a US Federal Housing Administration mortgage insurance backed mortgage loan which is provided by a FHA-approved lender. FHA insured loans are a federal assistance and historically allow lower income Americans to borrow money for the purchase of a home otherwise too expensive to afford. To obtain mortgage insurance from the Federal Housing Administration an upfront mortgage insurance premium (UFMIP) equal to 1.75 percent of the base loan amount at closing is required and is normally financed into the total loan amount by the lender and paid to FHA on the borrower’s behalf. There is also a monthly mortgage insurance premium (MIP) which varies based on the amortization term and loan-to-value ratio.
Originating during the Great Depression in the 1930s when the rates of foreclosures and defaults rose sharply so the program was intended to provide lenders with sufficient insurance. Some FHA programs were subsidized by the government but the goal was to make it self-supporting based on insurance premiums paid by borrowers. Over time private mortgage insurance (PMI) companies came into play and now FHA primarily serves people who cannot afford a conventional down payment or otherwise do not qualify for PMI. The program is now modified to accommodate the heightened recession.
A VA loan is a mortgage loan in the United States guaranteed by the U.S. Department of Veterans Affairs (VA) issued by qualified lenders.
The VA loan was designed to offer long-term financing to eligible American veterans or their surviving spouses (should they not remarry). The basic intention of the VA direct home loan program is to supply home financing to eligible veterans in areas without private financing and help veterans purchase properties with no down payment. Eligible areas are designated by the VA as housing credit shortage areas generally rural, small cities or towns not close to metropolitan or large cities.
The VA loan allows veterans 103.3 percent financing without private mortgage insurance or a 20 per cent second mortgage plus up to $6,000 for energy efficient improvements. A VA funding fee of 0 to 3.3% of the loan amount is paid to the VA which may also be financed. Veterans in a purchase may borrow up to 103.3% of the sales price or at a reasonable value to the home depending on which is less. Since there is no monthly PMI more of the mortgage payment goes directly towards qualifying for the loan amount meaning larger loans with the same payment. In a refinance where a new VA loan is created veterans may borrow up to 100% of reasonable value allowed by state laws. In a refinance where the loan is a VA loan refinancing to VA loan (IRRRL Refinance) the veteran may borrow up to 100.5% of the total loan amount. The additional .5% is the funding fee for a VA Interest Rate Reduction Refinance.
VA loans allow veterans to qualify for loan amounts larger than traditional Fannie Mae / conforming loans. VA will insure a mortgage where the monthly payment of the loan is up to 41% of the gross monthly income vs. 28% for a conforming loan assuming the veteran has no monthly bills.
The maximum VA loan guarantee varies by county. As of 1 January 2012 the maximum VA loan amount with no down payment is usually $417,000 however this amount may raise to as much as $1,094,625 in certain specified “high-cost counties”.
HomePath financing is available only on Fannie Mae for owned properties offering great benefits including a 5% down payment as of November 16, 2013, no mortgage insurance, expanded seller contributions, and more. HomePath Mortgage is available for move-in ready properties for both owner occupants and investors and a limited number of HomePath lenders now offer HomePath Mortgage for the LLC borrower. The HomePath Renovation Mortgage provides the funds to purchase and renovate in one loan. You also can use the financing of your choice from any lender, such as your local bank, credit union or other financial institution.
This loan can help buy and repair a fixer-upper-
FHA 203k loans are offered by the Federal Housing Administration which is a government agency. The federal government designed these loans to encourage lenders funding seemingly risky home purchases. Goals of neighborhood revitalization and greater homeownership opportunities also drove the creation of this loan.
FHA 203k loans are designated for houses that are in need of rehabilitation. The loan covers the cost of the property but also the cost of necessary home repairs. The down payment requirement is low and eligibility criteria is loose. Homeowners whose homes need improvement can also refinance with these loans. A vast range of repairs, including room additions, bathroom remodeling, roofing, flooring and air conditioning systems can be funded with these loans.
There are two types of FHA 203k loans- regular and streamlined. Regular 203k loans are for homes that need structural repairs while streamlined loans are for those that need non-structural repairs.
In order to qualify, homeowners must plan to live in the home they are repairing. The following types of residences qualify:
The FHA has specific guidelines as to which types of repairs qualify for 203k loans. The lender will also stipulate which repairs can be made.
Allowable repairs include:
Labor costs must be included in the loan, even if the homeowner performs the repairs. The repairs must be completed within six months.
The FHA 203k loan amount has to include the price of the home plus the expected price of repairs. The homebuyer has to provide a percentage of the loan as a down payment usually far below those required by conventional loans and other FHA loans.
In order to apply the loan applicant has to provide proof of income, proof of assets and credit reports. Additionally the applicant has to provide a home appraisal including how much the home will be worth after the improvements are made. The applicant has to present a detailed proposal of the work required on the home including a cost estimate of each repair.
Some loan seekers hire a 203k consultant to prepare the extra paperwork. The consultant’s fees can be included in the loan amount.
An FHA 203k loan is especially beneficial to those who cannot afford a finished home and are willing to take on a fixer-upper. If choosing to apply for a 203k loan keep in mind many lenders do not offer 203k loans. Finding a lender who is willing to work alongside the client is important and expect to spend a lot of time on document preparation and bureaucracy. FHA 203k closing can take from 60 to 90 days. Interest rates tend to be high due to the risk involved to the lender and the home improvements cannot guarantee an increase to the value of the home.
Be careful not to over-invest on the home and avoid pouring more money into the house than can be recouped in a resale.
Streamline refinancing was introduced as a way to speed up the home refinancing process. By reusing the original loan’s paperwork the process of refinancing a home was reduced from a few months to only a few weeks. Streamline refinancing has become more popular because reuse of the original home’s appraisal may be the only way someone underwater on the property can refinance it at all.
Streamline refinancing is an option for borrowers who want to take advantage of low interest rates, get out of an adjustable rate mortgage (ARM) or graduated payment mortgage (GPM). Both the FHA and VA offer streamline refinancing for home mortgages.,
The Federal Housing Administration and VA do not permit the refinancing of a home unless there is a net benefit to the borrower. This net benefit is a reduction of five percent or more in the monthly house payment, including principal, interest and mortgage insurance.
Adjustable rate mortgages are dangerous because their interest rate could spike up to five or ten percent especially for sub-prime borrowers whose loans started with low teaser adjustable rates but compensate by charging several times the official interest rate later. The only exception to this net benefit rule is when someone refinances to a fixed rate mortgage from an adjustable rate mortgage. In those cases the new interest rate may actually be higher than the ARM interest rate.
Streamline refinancing reuses the original paperwork from a home loan allowing someone to refinance the property before private mortgage insurance (PMI) or insurance rates rise.
The FHA streamline refinancing program requires no repairs be made to the property except for the removal of lead based paint. For example repairs to a roof foundation or electrical wiring are not required for an FHA streamline refinancing.
The FHA streamline refinancing program does not permit home owners to receive equity back as cash. The borrower can receive no more than $500 in minor adjustments in closing. Sellers are allowed to contribute up to 6% of the home sales price to the closing costs.
There are additional loans available for making energy efficiency improvements or repairs to the property. The 203(k) is a rehabilitation mortgage with a cap of $35,000 for making repairs to a property.
Banks take the risk of the home not selling for more than owed against it if they must foreclose on it. Streamline refinancing programs allow at-risk borrowers to stay in their homes but it does not solve the underlying problem of people who over spend their budget on a house. The streamline refinancing process typically does not require verification of the level of income only that there is income. Permitting someone to live on Social Security Disability or unemployment to refinance the home may make the payments manageable but the debt will be paid off slowly and the borrower may be better off in the long run moving to a cheaper locale.
Those who choose no-cost mortgage refinancing can have the closing costs rolled into the loan causing the lender to charge a higher rate of interest. This will increase the monthly mortgage payment for those who do not have the cash to pay closing costs up front however the FHA streamline refinancing process does not permit this option. Refinancing costs must be paid up front and in full or the streamline refinancing does not go through.
While the FHA does not require a credit report to refinance an FHA loan the FHA approved lenders are free to set minimum credit scores.
With 10% down payment and without private mortgage insurance (PMI) then the right solution is an 80/10/10 loan.
Usually a 2nd mortgage or a Home Equity Line of Credit (HELOC) is offered up to 90% of the home value. These loans are popularly known as 80/10/10 loans where the first mortgage is 80 percent of the home value the second mortgage or HELOC is 10 percent and the last 10 percent is down payment by the borrower.
PMI is required on all conventional loans with less than 20% down payment. With 10% down payment opting for one loan of 90% would end up paying PMI however an 80/10/10 loan eliminates the need for mortgage insurance. In some cases this could mean a higher interest rate on the 1st mortgage hence an 80/10/10 loan is not for everyone. Depending on credit qualification and financial goals doing one 90% LTV loan and paying PMI may be a better idea.
American United Mortgage Corp has built a strong reputation as an outstanding mortgage brokerage firm serving the lending needs of real estate professionals, builders and individual home buyers and home owners in California.
42820 Albrae Street,
Fremont CA 94538