Upscale Equities - Mortgage Types

Conventional Loans

A conventional mortgage or conventional loan is any type of home buyer’s loan that is not offered or secured by a government entity. Instead, conventional mortgages are available through private lenders, such as banks, credit unions, and mortgage companies. However, some conventional mortgages can be guaranteed by two government-sponsored enterprises; the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac).1

The typical documents requested for loan approval will include but may not be limited to:

Thirty days of pay stubs that show income as well as year-to-date income
Two years of federal tax returns
Sixty days or a quarterly statement of all asset accounts, including your checking, savings, and any investment accounts
Two years of W-2 statements
Borrowers also need to be prepared with proof of any additional income, such as alimony or bonuses.

Buyers can use a conventional mortgage to purchase a one- to four-unit home, a condominium, modular or manufactured home as a primary, secondary or investment property.

Interest Rates

The current market and the borrower’s FICO credit score influence the interest rate he’ll receive on a conventional loan. Lenders offer conventional loan programs at a fixed rate, where the interest rate stays consistently the same throughout the term of the loan, or as an ARM, an adjustable-rate mortgage, where interest rates initiate at a below-market rate and change on a designated schedule, which ranges from monthly to annually or longer.

Loan Limits

Conforming conventional loans have a maximum loan limit set by Fannie Mae at the county level. In the case of non-conforming loans, banks generally set the limit at 80 to 90 percent of the home’s appraised value.

FHA Loans

New York FHA loans are mortgages insured by the Federal Housing Administration. These government loans are popular among homebuyers, especially first time homebuyers, because of their lower down payment requirements and their more flexible lending standards.

Individuals who take out FHA home loans pay for mortgage insurance, which protects the lender if the borrower defaults on the loan. As a result, because they are protected, many lenders offer FHA loans with low interest rates and easier qualification standards. FHA loans have been helping New Yorkers to become homeowners since 1934.

A few key features – such as low down payments, low closing costs, and easy credit qualifying set FHA mortgages apart from other government home loans and conventional mortgages.

Reverse Mortgages

A reverse mortgage is a type of mortgage loan that's secured against a residential property that can give retirees added income by giving them access to the unencumbered value of their properties.

In a reverse mortgage, you keep the title to your home. That means you are responsible for property taxes, insurance, utilities, fuel, maintenance, and other expenses.

If you don't pay your property taxes, keep homeowner's insurance, or maintain your home, the lender might require you to repay your loan.

To learn more about a reverse mortgage please contact our Reverse Mortgage Specialist Sam Lowy at 917.577.4840

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Jumbo Loans

Jumbo loans are available for borrowers that are in need of a mortgage exceeding the loan limit set by Fannie Mae and Freddie Mac in their county for a single-family home. Designed to finance luxury properties and homes in highly competitive local real estate markets, jumbo mortgages come with unique underwriting requirements and tax implications. Qualifications for a jumbo loan can sometimes be more stringent than a conforming loan.

We will work closely with you to ensure you understand all the specific costs and requirements, as well as the various lender options available. As we work with dozens of banks and lending institutions, we often have access to mortgage products that are not available to the general public. This ensures that you get the best rate and the best program available to you, based on your goals, financial data and other personal information.

VA Loans

The VA program is arguably one of the best mortgage products available, as it should be for our veterans. VA home loans require no down payment, no PMI, and they offer fast closings, often in 30 days or less.

One of the first questions our brokers ask is: “Have you or your spouse ever had any military experience?” Too many times this question is not raised, and a valuable opportunity is missed. brought up and therefore the VA loan product is never presented to the veteran as an option.

The fact is that your bank or credit union may not have VA products in their portfolio – in which case, they will never tell you about it -- but we will.

Fixed Loans

With a fixed-rate mortgage, the interest rate does not change for the term of the loan; the monthly payment is always the same. Typically, the shorter the loan period, the more attractive the interest rate will be. Payments on fixed-rate fully amortizing loans are calculated so that the loan is paid in full at the end of the term. In the early amortization period of the mortgage, a large percentage of the monthly payment pays the interest on the loan. As you pay the mortgage down, more of the monthly payment is applied toward the principal.

A 30 year fixed-rate mortgage (allows for lower monthly payments than a 15 year fixed-rate mortgage) is the most popular type of loan. A 15 year fixed-rate mortgage enables you to pay off your loan quicker and lock into a lower interest rate.

Alternative Loans

Some people – such as self-employed borrowers and investors – don’t check all the boxes for conventional mortgages. For them, an alternative (or non-conforming) loan may be a feasible option. The downside is that non-conforming mortgages typically have higher interest rates and may carry some additional fees and even some additional insurance requirements. In other words, they are typically more costly. On the plus side, these loans typically have a lower FICO score requirement and will lend up to 75% LTV.

For more information about these loan types work, please call our office.

Renovation Loans

Thinking about buying a fixer-upper? A Renovation Loan will cover the cost of buying the property, as well as the cost of renovating the home. Please note that these loans may have additional fees because the lender may need to make additional inspections and disbursements during the construction process. Both Fannie Mae and Freddie Mac have renovation loan programs, but these two government-sponsored enterprises don’t directly lend money to consumers. You’ll need to work with a private mortgage lender who provides conventional mortgage products.

Fannie Mae’s HomeStyle® Renovation Mortgage (available in 15- or 30-year fixed-rate terms) allows homebuyers and existing homeowners to combine their home purchase or refinance with the financing needed for renovations and repairs into a single mortgage.