Senvesco Real Estate Financial Services, Short Sale and Loan Modifications

Overview

The mortgage financing industry is highly competitive and also has become very creative. Lenders across the country have developed financing options to meet the specific needs of virtually all potential borrowers. This section attempts to outline some of the common types of loan programs that are available, issues to consider, and how to select the most appropriate loan/s to meet your needs. However, your best approach is, to talk with one of Senvesco mortgage specialist first.

Home Buying

Home Buying

Today, home buyers have many choices of financing options to choose from. This process can be an exciting and yet intimidating one. However, with proper planning; the home-buying process can be very rewarding.

At this time of your searching, It is very important for you to become familiar with some of the more common types of loans that are available.

For most homebuyers, and home sellers, being pre-approved for financing can be a significant factor in the decision-making process. We recommend getting pre-approved before you start looking for a home. Having financing in place prior to the negotiation process can help ease much of the stress typical to those discussions.

It is in your best interest that you obtain some form of mortgage qualification -
Pre-Qualified or Pre-Approved.

Pre-Qualified is a non-binding agreement. We will informally estimate the amount of money you can borrow based on your income, expenses, assets and liabilities. We will not typically investigate your credit to verify your income or debts.

Pre-Approved means you have provided Senvesco written evidence of your income, expenses, assets, liabilities and credits. We will then verify your income usually with a copy of recent pay stubs or a copy of your W-2. You will receive from Senvesco a written letter that shows you have the qualifications necessary to qualify for a mortgage loan of a specific amount.

Refinancing

Refinancing

What is Rate and Term:
Refinancing is paying off an existing loan with the funds from a new loan, usually of the same size, and using the same property as collateral. There are several refinancing programs available to homeowners. One option is a rate and term refinance, which means the loan amount stays the same. This is usually done to reduce the term of a longer mortgage, switching to a different type of loan or just to reduce you current interest rate.

What is Cash Out:
You can refinance your home and get extra cash for various purposes. It pays off your existing loan/s plus cash. This option can be used to pay off high interest credit card debt, student loans or remodeling your home.

What Factors to Consider When Selecting a Loan Program

Rate Environment:

The type of rates (fixed, adjustable, hybrid etc) that are available in the market. The level and direction of these rates based on current economic conditions play an important part in determining what type of loan program/s that is suitable for you.

Risk Tolerance:

Your own comfort level of the amount of debt you will incur, the uncertainty of future rate fluctuations, and your current and future expected income level are highly important factors to evaluate.

Time Horizon:

Your expected time you plan to own your home and potential changes in your financial conditions

We encourage you to work with a Senvesco Mortgage Consultant to analyze your financing needs and compare different mortgage programs to find the right one for you

Some Of The Benefits Of Refinancing

Some Of The Benefits Of Refinancing

Lower Your Monthly Mortgage Payment

One of the most popular reasons to refinance is to lower your monthly payment. This is usually referred to as a 'rate and term' refinance. By lowering the applicable rate, you reduce the monthly payment and interest paid over the life of the loan (assuming the mortgage amount and the term of the refinanced mortgage are comparable to the mortgage amount and term of the mortgage being paid off).

Cash-Out Tax-deductible Savings
This is when you can increase your mortgage balance and receive a check back from the mortgage company at the closing. The interest costs on home mortgage loans are deductible for tax purposes, subject to certain limitations about which you should consult with your tax advisor. If you are currently paying a higher rate of interest on car loans, personal loans, credit cards, or other forms of debt that are not deductible, it may be worthwhile to consider taking the cash out of your home (providing you have the equity) to pay off these other debts. Funding a child's education, buying a new car, or purchasing additional real estate are other good reasons to refinance and take cash out. Some lenders will allow you to take up to 80% of the appraised value of your home.

Reduce The Term Of The Mortgage
Choosing to shorten the term of the loan, such as going from a 30 year fixed to a 10/15/20 year term, will result in significant interest savings over the life of the loan. A shorter fixed rate term will typically have a lower interest rate than a 30 year fixed rate loan, but keep in mind that your monthly payment will most likely increase.

Switch From An Adjustable Rate Mortgage (ARM) To A Fixed Rate Loan
You may have initially chosen an ARM because it afforded you a lower monthly payment compared to the fixed rate payments at that time, and allowed you to qualify for a more expensive house. It also could have been that you were simply more comfortable with the ARM because it had a lower payment. Or, you may have only intended to stay in your house for a short period of time, and now find that you may not be relocating anytime soon. If you find that your ARM has moved up in the past few years, or that you simply like the security of a fixed rate loan, you may want to consider refinancing.

Begin Refinancing now. To begin the pre-approval process, please complete our contact form or call us at for your FREE consultantion 1-(800) 775-7785

Types of Mortgages

Fixed Mortgages
Fixed rate mortgages are most favored by those buyers who may have average credit or who are first time home buyers. Fixed rates are most beneficial when the market conditions are not stable.

The most common term for the fixed mortgage is 30 years. Next in line is 20 years and if you want to pay off your mortgage earlier, 15 year loan would be a choice. The loan is amortized over the terms agreed upon and the rate is fixed for the duration regardless of the market conditions. Because of their stability, fixed rates can help on your financial planning.

Adjustable Rate Mortgages
Standard ARM: Available with initial rates that are fixed for 1, 3, 5, 7, or 10 years. When the initial rate period is up, the loan will adjust based on a pre-selected index like the one-year Treasury Bill, Libor, COFI etc The rate caps are typically 2% per adjustment and 6% over the life of the loan.. When the loan is adjusted, the lender adds a margin resulting in the interest rate that you pay over the life of the loan. Your monthly payment adjusts when the interest rate changes. They do have caps to protect you, such as 2% per year, and 6% life time cap over your initial rate. These loans are commonly referred to as 3/1, 5/1, 7/1, etc., the first number represents how long the initial interest rate is set while the second number indicates how often the adjustment period is. These loans are used to initially qualify you for the purchase of your home due to lower income but you expect your income to increase in the near future. Some of these loans have provisions to convert to a fixed rate in the future based on certain conditions.
Call 1-800-775-7785 to speak with one of Senvesco Mortgage consultant for your options.

Loan Size (Conforming vs Jumbo)

Conforming Loans
These loans are up to a maximum amount of $417,000 for a one-unit, $533,850 for a duplex, $645,300 for a triplex and $801,950 for a four unit residential property. These loans must be in compliance with the standardized underwriting guidelines set forth by the federally-chartered, private mortgage companies such as Fannie Mae (Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Corporation) to be purchased by them. Fannie Mae and Freddie Mac help facilitate the availability of home loans throughout the country. These loans are available as fixed rate or adjustable rate programs, with payment schedules of 10, 15, 20, 25 or 30 years. Down-payment requirements can be as little as 3%. Some programs allow for no down-payment -100% financing. 100% Financing-Zero down payment. This option is common for first-time buyers because you can put little or no money down. The lender typically requires purchasing a Private Mortgage Insurance (PMI) Policy. This PMI is paid in monthly installments by the buyer. You may consider 80/20 option or buy up the PMI with an up front fee.

Jumbo Loans
Loan amounts over $417,000 are also known as non-conforming loans or Jumbo loans. Down-payment requirements can be as little as 5% and based on your credit rating and cash reserves requirements.

We encourage you to work with our Senvesco Mortgage Consultant to analyze your financing needs and compare different mortgage programs to find the right one for you.

Call 1-800-775-7785 to speak with one of Senvesco Mortgage consultant for your options.

Interest Only Loans

In interest only loans you typically have multiple monthly payment options. The amount that is borrowed is typically not repaid until the end of the term of the loan. Interest only loans allow you to keep your payment low by paying interest only. On average a homebuyer can afford 20% more by choosing an I/O option.

However, one must recognize that there is no reduction in your loan balance so long as you maintain interest only option.

Piggy Back Loans

This option is available if you do not want to put down a 20% down payment and want to avoid paying a PMI. With a piggyback loan, you will have a second loan in addition to your primary mortgage. In general, it is an 80-20 loan meaning that the primary mortgage is 80% of the purchase price and the piggyback loan is the remaining 20%. Below are two other common piggyback loans:

80/15/5 - You obtain a 1st loan for 80% of the purchase price and a 2nd loan for the additional 15% and you put only 5% down.

80/10/10 - You obtain a 1st loan for 80% of the purchase price and 2nd loan for the additional 10% and you put only 10% down.

Balloon

These are available with initial rates that are locked for 5 or 7 years. Whatever the remaining amount that is left on the loan is due in full at the end of the rate period. These loans should be carefully scrutinized, preferably with legal counsel, before choosing a balloon over another type of loan.

Negative Amortization Loans

These loans do not payoff the principal or the full amount of interest that is due. Negative amortization is a loan payment schedule in which the outstanding principal balance goes up rather than down. This loan allows for the lowest possible payment that you can make. These loans should be carefully scrutinized, preferably with legal counsel, to make sure that you understand the pitfalls of a negative amortization loan.

Buy-downs

This program is based on a standard ARM program, but allows for reduced interest payments for the first couple of years. The reduced interest lowers the mortgage payment and may allow someone to qualify for a loan that they otherwise would not have qualified for at the higher rate. The borrower is responsible for paying the difference between the below-market rate of the loan and the initial rate. This can be done with either a lump-sum in escrow, or by paying the required points on the loan.

No Income/No Asset Verification Loan

These loans allow a customer to receive a mortgage without verifying their income. Because the income is not verified on these loans, there is more emphasis placed on the credit history and the appraisal of the subject property. There are several different variations including

Stated Income

The income is stated but not verified. The employment history is usually verified with a letter from an accountant or a copy of a business license.
No Income/No assets: Neither the income nor any assets are stated on the application. This is commonly referred to as a 'no-doc' loan. You must have a superior credit history in order to be considered for this loan.

Equity Line of Credit

A home equity line of credit is a loan obtained using the equity in a home. Most home equity lines are taken as a 2nd loan on a home. Some of the most common uses for a home equity line are home improvements, children’s education, or for new investments. Since your home is used as collateral, you can deduct the interest paid. A home equity line has a rate tied to prime rate, to which a fixed margin is added.

FAQ

Q: What is a prepayment penalty?

Q: Should I get Pre-Approved or Pre-Qualified?
A: We highly recommend that you are pre approved before you start your home search.
Here are the reasons
Know exactly what you can afford
Be in a more credible position with the seller:
You will close your loan quicker

Q: What will I need to provide my loan officer to obtain pre-approval?
A: Fill out the application herein with as much information as possible. Your loan consultant will review the information, run your credit report, and will call you to review and ask for the following documents
-W-2’s for last the last two years
-Two most recent pay stubs
-Two most recent savings/checking, investment accounts, 401K, etc.)

Q: What are the fees involved with purchasing a home?
A: Initial Fees are; Loan fees or points. A point is a fee imposed by a lender equal to one percent of the loan amount. . Processing or origination fees. These cover the administrative cost of processing the loan.

Q: What are points?
A: One point is equal to 1% of the loan amount. This amount, like the interest rate, can vary. You can “buy” the interest rate down to a lower rate by paying more points. But realize that you will have to provide more out of pocket cash at the close of escrow.

Q: Why do mortgage interest rates go up and down so dramatically?
A: As the lending industry has evolved the buying and selling of mortgages has become very sophisticated and there are many different investors making home mortgage loans. The easiest indicator you can follow is watching the direction of interest rates in the one-year Treasury Bill. Although interest rates usually have long periods of decline or increase, there are many days when rates may jump up or down dramatically.

Q: What is a “no-closing-cost” loan?
A: If an advertisement said “Higher Interest Rate-You Pay No Closing Costs,” they would be more accurate. One of the choices you have when selecting your mortgage is the option of financing the cost to obtain your loan by paying a higher interest rate for the life of your loan and letting your lender write the check at closing to pay the fees.

Q: What is a prepayment penalty?
A: Some lenders may offer concessions on their loan programs such as a lower start rate or lower fees. In order for the lender to recover these costs and make a profit, it may place a prepayment penalty provision in the loan agreement. If the loan is paid off within the first 3 to 5 years, you may be charged a penalty.