Home Equity Line of Credit

A HELOC – or Home Equity Line of Credit – is a secured line of credit often used to pull equity out of a home. Also known as a second mortgage, there are many uses and times where HELOCs are advantageous. The most common uses for a HELOC are for home improvements or to cover major expenses like funding a college education or paying hefty medical bills. Although, there is normally a limit on how much you can pull out based upon the current state of the market, your credit score and the type of property. HELOCs can also be used on the front end, as part of your down payment when purchasing a house. The term “80-10-10” refers to 80% loan to value first mortgage a 10% HELOC and 10% down payment. First becoming common in the early 2000s, this method of buying is making a comeback. HELOCs normally have a draw period, or a time when you can take money out and put money back in, using the line as a revolving line of credit. This can be from 5-15 years and during this time most lenders typically require interest only payments. Once the draw period has ended, the repayment period begins – requiring you to pay the principal every month for the remaining payments. Interest rates on HELOCs are based on an INDEX plus a Margin. The Index is normally the Wall Street Journal published Prime Offer Rate. The Margin is set based on your loan-to-value ratio and credit score. Rates fluctuate month-to-month based on the published index value.

FHA Loans

Designed to help low-to-moderate income borrowers, an FHA loan is a federally backed mortgage issued by an approved lender and insured by the Federal Housing Administration (FHA). Most FHA loans only require 3.5% down payment and often allow for lower credit scores than conventional loans. However, minimum credit scores can vary from one FHA lender to the next – requiring a little homework on our part to find the ideal match. All FHA loans come with two types of mortgage insurance. Typically financed into the loan, the FHA charges an up-front mortgage insurance premium of 1.75% of your total loan amount. In addition, most FHA loans require a monthly mortgage insurance premium (MIP) that is paid for the life of the loan – although there are exceptions. An FHA loan is a great option for buyers who fall outside of the conventional loan requirements or have “B” or “C” credit.

VA Loans

Backed by the US Department of Veterans Affairs, VA loans are a special mortgage option available to veterans, active duty service members and select military spouses. Created in 1944 amid WWII, these loans are a benefit program that help our nation’s heroes and their families purchase and/or refinance a home. One of the numerous benefits of a VA loan is that many borrowers can qualify for a $0 down mortgage! This means a borrower does not have to make a down payment and can still buy a home. VA loans also boast some of the most competitive interest rates in the market and are easier to qualify for than some other loans. Also, unlike conventional loans, VA loans do not require PMI. However, most of these loans do feature something called a “funding fee.” This fee is paid directly to the VA to ensure the program keeps running for future generations. The amount of the funding fee varies in relation to the borrower’s circumstance and does not necessarily apply to all veterans. If you are a veteran, active duty service member or military spouse, you should discuss your situation with one of Mortgage Atlanta’s loan experts to learn whether a funding fee applies to you. We thank you for your service! Mortgage Atlanta takes extra pride in working with our VA clients and we will donate up to $500 of our profits on each VA loan to a military-backed charity of your choice!

Jumbo Loans

Jumbo loans are conventional, non-conforming loans that are above the conforming loan limit set by Fannie Mae and Freddie Mac. Because these loans are not “backed” by Fannie, Freddie or any standard guidelines, the programs and rates can vary greatly from one lender to the next. Shortly following the mortgage meltdown of 2008, the Consumer Financial Protection Bureau (CFPB) came up with some general guidelines that lenders should follow on all loans and – fortunately – those guidelines are followed by most jumbo lenders. Because these loans involve lending larger amounts of money, most lenders like to go through a very through underwrite to minimize the financial risk. It’s important to note that jumbo loans often require higher down payments and better credit scores than their conforming counterparts. Jumbo loan interest rates are often slightly higher than Fannie Mae or Freddie Mac backed loans. Because there are so many moving parts and a greater risk involved, it’s important that the borrower takes the time to fully understand the loan and get pre-approved by a qualified loan officer to avoid any hiccups along the way. Mortgage Atlanta loan specialists welcome the opportunity to explain the benefits and potential pitfalls of a jumbo loan to help you decide if it’s the right fit for you.

Conventional Loans

Conventional loans – also known as conforming loans – are often backed by government-sponsored enterprises (GSE) like Fannie Mae or Freddie Mac. Short for Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac), both are corporations that trade in mortgages – providing access to affordable home financing for millions of Americans. Ideal for both first-time and seasoned home buyers who don’t wish to part with a large down payment, the minimum down payment for first-time homebuyers is 3% of the purchase price. For more seasoned buyers, the minimum down payment is 5%. Bear in mind that any down payment under 20% means the borrower will be required to pay private mortgage insurance (PMI) on their loan. In addition to primary residences, Fannie Mae and Freddie Mac also offer conventional loans on vacation or second homes, as well as investment properties. The interest rate and cost of conventional loans are determined by credit score, loan-to-value ratio, transaction type (purchase or refinance), occupancy type and property type. For example, a borrower putting down 15% on a single-family home with a 740 credit score will have a lower rate/cost than a borrower putting down 5% on a condo with a 690 credit score. Confused? Don’t worry, we’ll walk you through it!

Your Loan Is As Unique As You Are

Buying a home represents one of the most exciting times in your life – so exciting, in fact, that it’s easy to forget to cross a few t’s and dot a few i’s. That’s where our deep understanding of the loan process, paired with our talent at guiding our clients from point A to point B, sets us apart from most mortgage lenders. At Mortgage Atlanta, we don’t believe in cookie-cutter solutions. We can explore a variety of loan options together to determine the best fit for your needs.

30-Year Fixed Rate Mortgage

Historically, the most popular loan for which borrowers try to qualify, is the traditional 30-year fixed-rate mortgage. It offers a steady interest rate and monthly payments that never change over the life of the loan. This may be a wise choice if you plan to stay in your home for a long time, you want to secure a stable payment, or both. When interest rates are low, fixed-rate loans can be fairly competitive with adjustable-rate mortgages and may be a better deal in the long run because you can lock in the rate for the life of your loan.

15-Year Fixed Rate Mortgage

Much like the traditional 30-year fixed-rate mortgage, a 15-year fixed-rate mortgage offers a steady interest rate and monthly payments that never change over the life of the loan. The only exception is that this loan is fully amortized in half the time. Advantages over 30-year loan include the fact that 15-year loans often boast lower interest rates and you’ll have an opportunity to own your home twice as quickly. Unfortunately, it also means that you will have to commit to a higher monthly payment. Rather than having to stomach that kind of commitment in our ever-changing world, some borrowers opt for a 30-year fixed-rate loan and voluntarily make larger payments in order to pay off their loan in 15 years.

Hybrid ARM (3/1 ARM, 5/1 ARM, 7/1 ARM)

Hybrid Adjustable-Rate Mortgages (ARMs) can offer the best of both worlds: lower interest rates and a fixed payment for a longer period of time than most adjustable-rate loans. Available as 3/1, 5/1 or 7/1, the first number represents the number of years for which the fixed monthly payment and interest apply before converting to a traditional adjustable-rate mortgage loan. Once it converts, the payment and interest rate will be determined by then-current rates for the remaining life of the loan. This is a terrific option for borrowers who expect to move or refinance the loan before or shortly after the adjustment period. Before you choose an ARM, it’s important to fully understand the terms and potential for higher payments in the future. Your Mortgage Atlanta Loan Specialist will be happy to discuss the short-term benefits and potential long-term pitfalls of this loan option with you.