Understanding the Types of Loans Available Conventional Loan Programs Conventional loans are traditional home mortgages, not backed by any government program of insurance or guarantee. There are standard underwriting guidelines for conventional conforming loans up to $417,000. These loans can carry fixed or variable (ARM) rates and a variety of repayment terms can be tailored to your individual needs. Buyers will need cash reserves/savings to cover two months of payments and generally, there is not a penalty for prepayment. Fixed Rate Mortgage Fixed Rate Mortgages provide the security of a fixed principal and interest payment for the term of the loan. The term of a fixed rate mortgage can provide the flexibility needed to meet your specific goals. Common fixed rate mortgage terms are 10, 20 or 30 years. Adjustable Rate Mortgage An Adjustable Rate Mortgage (ARM) features a variable interest rate which is periodically adjusted after a set term, generally one to ten years. For example, a 3/1 ARM is the same fixed rate for three years, then adjusts annually, within established guidelines, to match current interest rates. ARMs may provide the security, flexibility and affordability prospective home buyers desire. These loans are especially attractive to home buyers who plan to trade up in future years. Generally, initial interest rates are lower than on fixed rate mortgages. Jumbo Mortgage If the anticipated amount of your mortgage loan exceeds $417,000, we offer a variety of mortgage options which will meet your needs. So-called non-conforming jumbo loans can be either fixed or adjustable rate mortgages. Underwriting guidelines may vary depending on program selected, down payment and actual loan amount. FHA/VA Loan Programs FHA loans are ideal for first-time home buyers and those low- to moderate-income borrowers. Loans are insured by the Federal Housing Administration. Down payments may be as little as 2.25% and there are several options for the source of funds needed for closing. The seller can contribute up to 6% towards closing costs, prepaid cost and points. The FHA loan limit for the St. Louis region is $213,750 for a single family residence. No cash reserves are required for loan approval. FHA loans can be fixed or adjustable rate. VA loans are available to individuals who have served or are currently in the U.S. armed forces that meet eligibility requirements. VA mortgages may be provided with no down payment requirement, making them ideal for first-time borrowers. Loan amounts may be as much as $359,650 with full entitlement. Requirements are generally 2 years in the armed forces with veterans benefits. A Certificate of Eligibility is required. The seller can pay closing costs and prepaid items. There is a 100% financing option and there are no penalties for prepayment. Community Lending Programs First Place Loans Missouri Housing Development Commission sponsors loan program offering first-time home buyers assistance in purchasing a home. The MHDC program provides below-market interest rates and cash assistance for down payment/closing costs. Homebuyers with a household gross income less than $56,100 (1 or 2 person household) or $64,515 (three or more person household) can qualify. Persons who have owned a home within the previous three years are not eligible unless buying in a specially designated area. PROLOANS PROLOAN is a financing program that provides free extended protection against rising rates, exclusively to buyers of new homes built by skilled union craftsmen. With the PROLOAN program you lock into a interest rate for 180 days. If the real estate interest rates improve, you can float down to a lower rate at a minimal cost. Float-downs are done only when you benefit in the long-term from the lower rate, therefore you can't lose! This protects you from a rate and payments increase, and gives you the option to benefit from any interest rate decline. Special Loan Programs Reverse Mortgages A Reverse Mortgage enables homeowners over the age of 62 to convert the equity in their home into cash. This money can be used for living expenses, medical costs, home updates or retrofitting for special needs, estate planning, to pay off an existing mortgage (so you no longer have monthly payments) or for whatever purpose the homeowner chooses. The money can be disbursed in monthly payments, one lump sum, as a line of credit or a combination of these. Best of all, Reverse Mortgages are non-recourse loans that don’t have to be repaid until the homeowner no longer occupies the house. Contact your loan officer or call Bob Lane at 314.372.4358 for more information. Buydown Mortgages A Buydown Loan is when the buyer or seller buys down the interest rate for a period of time. In a typical 2/1 buydown the borrower's first year rate is 2% below the note rate, and 1% below the note rate in the second year. This is often used in new construction with builder-sponsored buydowns. Bridge Loans If you're selling your home and find your DREAM HOME and want to buy it before your current home sells... a Bridge Loan can make that happen. A bridge loan, which the borrower qualifies for independent of any other loans, allows the purchaser access to the equity in their current home to use for down payment and closing costs for their new dream home.