Category: Understanding Loan Options

VA Loans & What They Mean for America’s Heroes

Marketplace Home Mortgage is proud to offer Veterans Affairs mortgages, better known as VA Loans, to America’s heroes. VA loans make it easier for veterans to become homeowners. They offer a zero percent down mortgage option, and rates are typically .25% lower than most conventional loans. VA home loans also do not require mortgage insurance.

Once you have earned eligibility for a VA loan it never expires and can be used as many times as you want. Even if you served 30 years ago, you can still take advantage of this mortgage option today. A surviving spouse may also qualify for a VA loan. If you have purchased a home with a VA Loan, and then sold the home and paid off the VA loan completely, you can re-use your benefit to buy another house.

Did you already purchase a home without knowing about the VA Loan option? Don’t stress – you can refinance with Marketplace Home Mortgage into a VA Loan! Homeowners can refinance up to 100% of the home’s value and get rid of their mortgage insurance, which is a very nice option in the current lending environment.

At Marketplace Home Mortgage, we love working with veterans and active military personnel. We have helped many veterans use this loan program to buy their dream home. To find out if you are eligible, or to get started, contact a Marketplace Home Mortgage VA Loan Officer today.

Source: https://www.benefits.va.gov/homeloans/purchaseco_eligibility.asp

Understanding Mortgage Terminology Guide

Buying a home can be a confusing process, especially for the first time you do it. There are many terms and acronyms used throughout the transaction that you may not be immediately familiar with. Luckily, when you work with the Marketplace Home Mortgage terminology guide you can always count on your Loan Officer to help you through the process and answer any questions that you may have about the mortgage terminology guide.

To get a head start on understanding the mortgage process, take a look at the mortgage terminology guide below. By learning more about these words and phrases, you will be better prepared to navigate a mortgage transaction. If you have any questions, never hesitate to reach out to your Marketplace Home Mortgage Loan Officer. Not connected with an MHM Loan Officer yet? Find one in your area and reach out today.

Understanding Mortgage Terminology Guide

1003 Form

A commonly used mortgage loan application developed by Fannie Mae. Sometimes called the Uniform Residential Loan Application.

Adjustable Rate Mortgage (ARM)

A type of mortgage loan characterized by interest rates that automatically adjust or fluctuate in concert with certain market indexes. Generally, an ARM begins with an introductory or initial interest rate, which then may rise or fall, but monthly payments may not exceed the ARM loan cap.

Borrower

The individual or individuals extended a loan and mortgage for the purchase of a house and/or property. The borrower is responsible for making all payments and fees associated with the loan over the life of the loan.

Closing

The formally documented sale of a home and/or property that includes signing all documents associated with the exchange and payment of required closing fees. A closing agent usually oversees this process.

Conventional mortgage

A mortgage offered by any one of the Government sponsored entities, different from an FHA or VA loan. These are typically 30-year fixed-rate loans.

Earnest money

A sum of money usually put up by the buyer when an offer on a home or property is made. The purpose of earnest money is as a token of good faith, a symbol that the buyer is seriously pursuing the purchase.

Equity

The measurable value of a home or property above and beyond that owed on a loan. A value upon which many homeowners often borrow.

Escrow

At the closing of the mortgage, the borrowers are generally required to set aside a percentage of the yearly taxes to be held by the lender. Monthly, the lender will also collect additional money to be used to pay the taxes on the home. This escrow account is maintained by the lender who is responsible for sending the tax bills on a regular basis.

FHA Loan

Loans extended by FHA (Federal Housing Administration) approved lenders. These loans are typically are designed to assist borrowers who are unable to get approval for conventional home loans.

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.

HUD loan

A type of loan available to HUD homebuyers that goes toward fixing up a home. The loan is subsequently absorbed into the mortgage. The term “HUD loan” is often confused with “FHA loan.”

Jumbo Mortgage

A type of high-risk loan, or non-conforming loan, in which the “jumbo” loan amount is higher than that of a conventional loan limit.

Lender, Mortgage Lender

The bank or finance company that directly awards home loan or mortgage money to a borrower or homebuyer. Legal-mortgagee.

Marketplace Approved®

A pre-approval provided by Marketplace Home Mortgage. When a buyer is Marketplace Approved the underwriting process is completed up front to eliminate surprises at the end. Marketplace Approved offers are also enhanced by an On-Time Closing Guarantee*. If we are unable to close your purchase on or before your scheduled closing date, we will pay your first mortgage payment up to $1,500 P&I and the seller of the property will also be paid $5,000.

Mortgage Broker

The entity that acts as a go-between between a homebuyer and mortgage lender, handling paperwork and finally effecting a mortgage. A broker does not make direct loans to buyers but works to find the best deal and finally collects fees as part of the mortgage process.

Mortgage Insurance

When buyers take out a mortgage with less than a certain dollar percentage to put down on the loan, lenders sometimes require mortgage insurance, a monthly premium that is added to the mortgage. This protects the lender should a buyer default on the home loan.

Mortgage Insurance Premium, MIP

A required fee added into an FHA loan paid at closing.

Mortgage Terminology Guide

Preferred Lender

A lender that is closely affiliated with a brokerage based on reputation and other industry factors. A mortgage lender that is recommended by a broker. Marketplace Home Mortgage is the Preferred Lender of many brokerages across the US.

Pre-Approval & Pre-Qualification 

Pre-qualification is the process by which a homebuyer may find out how much of a home loan he or she would be approved for with a lender. This is usually just an estimate based on preliminary information concerning income, debts, assets.  A pre-approval, on the other hand, is a stronger, more reliable evaluation of necessary documentation. At Marketplace Home Mortgage our clients are pre-approved (Marketplace Approved®) by a certified underwriter to ensure that they know how much they can really afford, eliminating problems later on.

Private mortgage insurance, PMI

A type of insurance many homebuyers are required to purchase, particularly when they are unable to put down a certain dollar amount on the loan; protects the lender in the event of borrower default.

Property appraisal                                

A fair market value of property performed by a licensed appraiser; takes into account not only condition, but also the value of similar local properties or comparable sales.

Rate Lock

A short-term agreement by a lender to “hold” a certain interest rate on a home loan while the buyer negotiates a sale transaction. Also, Rate commitment option.

Real Estate Settlement Procedures Act (RESPA)

This act passed in 1974 reeled in hidden costs, fees and kickbacks that had become widespread among real estate entities. Per this act, all fees and costs must be disclosed to both buyers and sellers.

Refinance

The process by which a borrower/homeowner may negotiate a lower interest rate on a mortgage, thereby lowering monthly payments. They may choose to work with their current lender or refinance with another lender.

Reverse Mortgage

A type of mortgage designed for homeowners over 62 years of age; gives them access to home’s equity in cash payments. Frees up money they may use for other important costs or to make needed home repairs. Since reverse mortgages are typically structured as loans, these payments are not typically considered income.

Sub-Prime Loan

a high-risk loan packaged with non-conforming loan limits and interest rates that make it possible for homebuyers with poor credit to qualify for a mortgage.

Title Company

A title company typically handles all tasks associated with the property title, including insurance and search.

Title Insurance

Insurance taken out on the property title that protects both borrower and lender in the event of a title dispute.

Underwriter

The company or service that evaluates a borrower’s creditworthiness prior to loan and mortgage approval.

VA Loans

Special, often discounted, home loans designed exclusively for military veterans.


This mortgage terminology guide and definitions were compiled from Mortgage terminology guide Calculator.

“Glossary of Mortgage Terms.” Mortgage Calculator, www.mortgagecalculator.org/helpful-advice/glossary.php.

No Down Payment & Low Down Payment Mortgage Options

One of the biggest perceived obstacles to home ownership today is the mortgage down payment.  Learn about your no down payment mortgage options and low down payment mortgage options.

According to the National Association of Realtors, 80% of home buyers think they need 10% or more down to buy a home – and that is simply not the case! (NAR, 2017) There are many programs out there that range from ZERO to 3% down, here are some of the options available to both first-time and repeat buyers:

No Down Payment Mortgage Options

USDA HOME LOAN / RURAL DEVELOPMENT – No Down Payment Mortgage Options

Anyone looking outside of the metro should consider this loan. With ZERO money down, low rates, and no mortgage insurance, the affordability of a USDA loan is almost unmatched in the mortgage market. Home buyers must make 115% or less than the area’s median income. Example: If the median income is $50,000 per year you can make up to $60,500. To see if an area you’re interested in is eligible click here.

VA HOME LOAN – No Down Payment Mortgage Options

This is a ZERO down mortgage option for home buyers with current or former military service. It is often the top choice for those eligible because it offers 100% financing and does not require great credit. With no monthly mortgage insurance and low rates, this is often the best loan option for members of the military and National Guard.

Low Down Payment Mortgage Options

FHA HOME LOAN – 3.5% DOWN PAYMENT

About 40% of home buyers under 40 use FHA loans. This loan is best for those who don’t want to put a lot down, but still want great rates and flexible credit requirements. The down payment required is 3.5% AND 100% of the down payment can be a “gift” from family or friends.  Take advantage of our low down payment mortgage options.

HOMEREADY HOME LOAN – 1-3% DOWN PAYMENT

This loan considers the income of everyone living in the house as part of the qualification process – this includes people who rent from you, parents, or children. For eligible buyers, it could be possible to get into the home you have your eye on for as little as a 1% – 3% down payment.

Although lower down payments generally have restrictions of some kind (like mortgage insurance or location-based eligibility), it is still reassuring to realize that you have options other than a conventional loan.  Even if you don’t qualify for 100% financing or don’t have enough for 3.5% down, down payment assistance is also available. Take advantage of our low down payment mortgage options.

If you want more information, or would like to see if you qualify for any of the loans mentioned above, contact a Marketplace Home Mortgage Loan Officer today!

If you are not connected with a Marketplace Loan Officer, just fill out a contact request on our Marketplace Approved site or contact us here. We will put you in touch with a local mortgage professional who can help you get started.

Source: “NAR 2017 – Research and Statistics.”, The National Association of Realtors, 7 June 2018, www.nar.realtor/research-and-statistics.

USDA New Income Limits in Minnesota Announcement

USDA New Income Limits in MinnesotaOn Wednesday, June 13th, new income limits went into effect for USDA loans in Minnesota. These household income limits vary by region and help determine eligibility for rural development home loans. There are many benefits to USDA loans, the most notable being that they don’t require a down payment.  You also may be surprised to discover where they are available.

To learn more about the new limits in your area and what they mean for home buyers, contact a Marketplace Home Mortgage Loan Officer today.

 

 

Source: www.RD.USDA.COM/MN
*Data for 1-4 person households

The Difference Between APR and Interest Rates

When you are comparing mortgage options, it is important to understand the difference between APR and interest rates. When you see a loan rate advertised, you’ll also see a corresponding APR (4.5%/4.762% APR). This Annual Percentage Rate is the total cost of your loan (interest and fees) expressed as a single number. The purpose is to give you one number for comparing multiple loans.

But it’s an imperfect science.The problem with using APR as designed is that the calculation applies to the entire length of the loan, and some people use mortgage loans for only a few years due to refinancing or sale. READ MORE

The Benefits of an FHA Home Loan

For some buyers, an FHA home loan may work when others can’t.

The FHA home loan program is designed to help promote homeownership. Loans distributed through this program are insured by the Federal Housing Administration. For many buyers, FHA loans make it easier to qualify for a mortgage.

When it comes to FHA Loans, here are a few of the features that can be beneficial:

  • Low Down Payments – As little as 3.5% down will work in most instances, and 5% covers most others.
  • Higher Loan Amounts – In some areas, FHA maximums can exceed conventional loan limits.
  • Lower Total Cash to Close – Sellers can help pay closing costs, and borrowers can receive gift money toward their down payments.
  • Streamlined and Cash Out Refinancing – Subsequent refinancing can be far easier and more lenient than with conventional loans.
  • Purchase and Rehab Financing – The FHA 203k loan can be a great option for the purchase of homes in need of a quick spruce up or even major remodeling when you don’t have sufficient funds to do it on your own.
Program details sourced from Top of Mind Networks, LLC. All rights reserved.
Questions? Contact a Marketplace Home Mortgage Loan Officer today.
Not connected with a Loan Officer yet? Find one at a branch near you.

What is a USDA Rural Home Loan?

A USDA rural home loan is a type of loan backed through the Rural Housing Division of the U.S. Dept. of Agriculture. It is available to millions of eligible primary home buyers with low to moderate incomes or scarce funds for down payments.

Features, benefits and things you need to know:

Zero Down – No down payment is required for a USDA rural home loan. Thirty-year, fixed-rate loans with no pre-payment penalty are the norm. Rates are very competitive with conventional loans.

Eligible Property – These loans are limited to “rural” areas, though you might be surprised by some of the suburbs of major metropolitan areas that qualify as rural. Homes should be modest in size and cost and constructed per local codes and regulations.

Eligible Borrowers – Funds are available for qualified borrowers who earn up to 115% of the area median income. Even candidates who have had past credit issues with late pays, bankruptcies or foreclosure may be eligible. Borrower’s income must support the proposed payments and meet the program requirements for approval. Primary occupancy is required. This program is not for investment properties.

Benefits – Minimum cash is needed to close. The USDA Guarantee Fee and eligible closing costs may be financed. Gift money, grant money, and seller contributions are allowed.

Program details sourced from Top of Mind Networks, LLC. All rights reserved.

If you have questions or want to learn about areas that meet the rural designation criteria, please don’t hesitate to reach out. We’re happy to help.