Mortgage Programs.

Learn About Your Options

The difference between a fixed rate and an adjustable rate mortgage is that, for fixed rates the interest rate is set when you take out the loan and will not change. With an adjustable rate mortgage, the interest rate may go up or down.

Many ARMs will start at a lower interest rate than fixed rate mortgages. This initial rate may stay the same for months, one year, or a few years. When this introductory period is over, your interest rate will change and the amount of your payment is likely to go up.

Part of the interest rate you pay will be tied to a broader measure of interest rates, called an index. Your payment goes up when this index of interest rates increases. When interest rates decline, sometimes your payment may go down, but that is not true for all ARMs. Some ARMs set a cap on how high your interest rate can go. Some ARMs also limit how low your interest rate can go.

• How high can your interest rate & monthly payment go with each adjustment
• How frequently does your interest rate adjust
• When can your payment increase
• Is there a cap on how high your interest rate can rise
• Is there a limit on how low your interest rate can go

USDA’s Rural Housing Service offers a variety of programs to build or improve housing and essential community facilities in rural areas.

We have many USDA programs to better fit with your individual needs. The most commonly used programs are the Single Family Housing Guaranteed Loan and the Section 502 Direct Loan Program. We provide more details below, but if you have any questions or would rather meet with one of our licensed professionals in person please don't hesitate to reach out and schedule a meeting at your convenience.

This program provides low-income and moderate-income households the opportunity to own adequate, modest, decent, safe and sanitary dwellings as their primary residence in eligible rural areas. Eligible applicants may build, rehabilitate, improve or relocate a dwelling in an eligible rural area. The program provides up to 100% financing to eligible rural homebuyers.

Applicants Must:

• Meet income-eligibility
• Agree to personally occupy the dwelling as their primary residence
• Be a U.S. Citizen, U.S. non-citizen national or Qualified Alien
• Have the legal capacity to incur the loan obligation
• Have not been suspended or debarred from participation in federal programs
• Demonstrate the willingness to meet credit obligations in a timely manner
• Purchase a property that meets all program criteria

This program provides low-income and very low-income households the opportunity to own adequate, modest, decent, safe and sanitary dwellings as their primary residence in eligible rural areas by providing payment assistance to increase an applicant’s repayment ability. Payment assistance is a type of subsidy that reduces the mortgage payment for a short time. The amount of assistance is determined by the adjusted family income.

A number of factors are considered when determining an applicant’s eligibility for Single Family Direct Home Loans. At a minimum, applicants interested in obtaining a direct loan must have an adjusted income that is at or below the applicable low-income limit for the area where they wish to buy a house and they must demonstrate a willingness and ability to repay debt.

Applicants Must:

• Be without decent, safe and sanitary housing
• Be unable to obtain a loan from other resources on terms andconditions that can reasonably be expected to meet
• Agree to occupy the property as your primary residence
• Have the legal capacity to incur the loan obligation
• Have not been suspended or debarred from participation in federal programs
• Meet citizenship or eligible noncitizen requirements

Properties Must:

• Be modest in size for the area
• Not have market value in excess of the applicable area loan limit
• Not have in-ground swimming pools
• Not be designed for income producing activities

The term "Conventional" means that the loan is not part of a government program. These loans typically cost less than a comparable government program, but have stricter guidelines making them more difficult to qualify for.

There are two main types of conventional loans:

Conforming loans have maximum loan amounts that are set by the government. Other rules are also set by Fannie Mae and Freddie Mac.

Non-conforming loans are less standardized. Eligibility, pricing, and features can vary widely.

FHA loans are loans from private lenders that are regulated and insured by the Federal Housing Administration (FHA), a government agency. The FHA doesn’t lend the money directly–private lenders do.

These loans generally end up costing more than conventional products, but the qualification rules are more lenient allowing more people to qualify for a home.

• Allow for down payments as low as 3.5 percent
• Allow lower credit scores than most conventional loans
• Have a maximum loan amount that varies by county

Used to purchase or refinance a principal residence. This is the most common FHA program used.

• Must be eligible for 96.5% financing and
• Must be able to finance the upfront mortgage insurance into the mortgage
• Must be able to cover the monthly payments for the annual mortgage insurance
• Property is a one-to-four unit structures

This program fills a unique and important need for homebuyers. When buying a house that needs repair or modernization, homebuyers usually have to follow a complicated and costly process. The interim acquisition and improvement loans often have relatively high interest rates, short repayment terms and a balloon payment.

Section 203(k) offers a solution that helps both borrowers and lenders, insuring a single, long term, fixed or adjustable rate loan that covers both the acquisition and rehabilitation of a property. Section 203(k) insured loans save borrowers time and money.

The extent of the rehabilitation covered by the Section 203(k) program may range from relatively minor (though exceeding $5000 in cost) to complete reconstruction. A home that has been demolished or will be as part of rehabilitatiod is eligible.

The types of improvements that borrowers may make using Section 203(k) financing include:

• Structural alterations and reconstruction
• Modernization and improvements to the home's function
• Elimination of health and safety hazards
• Changes that improve appearance and eliminate obsolescence
• Reconditioning or replacing plumbing; installing a well and/or septic system
• Adding or replacing roofing, gutters, and downspouts
• Adding or replacing floors and/or floor treatments
• Major landscape work and site improvements
• Enhancing accessibility for a disabled perso
• Making energy conservation improvements

FHA mortgage insurance is comprised of two parts- the Up Front Mortgage Insurance Premium (UFMIP) and the Annual Mortgage Insurance Premium. The UFMIP is paid at closing and can either be financed into your mortgage or paid for out of pocket. The Annual MIP is part of your monthly payment.

VA home loans are available to help Servicemembers, Veterans, and eligible surviving spouses become homeowners.

The VA programs provide a home loan guaranty benefit and other housing-related programs to help you buy, build, repair, retain, or adapt a home for your own personal occupancy.

VA Mortgages are unique compared to other home loans. Unlike other mortgage programs, they have no requirements for PMI or monthly mortgage insurance payments. Instead of PMI, VA Loans are financed in part through a small guaranty fee that is part of the closing. Furthermore, VA Loans are often less expensive on a monthly basis because you are not paying extra for monthly mortgage insurance.

• Often offer low-cost, streamlined refinance options and additional protections if you have trouble paying your mortgage later on
• Do not require monthly mortgage insurance premiums, but usually require an upfront fee at closing

The VA backs loans by guaranteeing a portion of it. The VA loan guaranty is a type of insurance that allows the us to provide more favorable terms.

• No down payment as long as the sales price doesn't exceed the appraised value
• No private mortgage insurance premium requirement
• VA rules limit the amount you can be charged for closing costs
• Closing costs may be paid by the seller
• No penalty fee if you pay the loan off early
• You don't have to be a first-time homebuyer
• You can reuse the benefit
• VA-backed loans are assumable, as long as the person assuming the loan qualifies

An IRRRL can only be made to refinance a property on which you have already used your VA loan eligibility. It must be a VA to VA refinance, and it will reuse the entitlement you originally used.

• No appraisal or credit underwriting package is required when applying for an IRRRL
• An IRRRL may be done with "no money out of pocket" by including all costs in the new loan or by making the new loan at an interest rate high enough to enable the lender to pay the costs
• When refinancing from an existing VA ARM loan to a fixed rate loan, the interest rate may increase
• No lender is required to give you an IRRRL, however, any VA lender of your choosing may process your application for an IRRRL
• Veterans are strongly urged to contact several lenders because terms may vary
• You may NOT receive any cash from the loan proceeds

A jumbo loan is a loan that exceeds the conventional loan limit for the area where the home is being purchased. In most areas of North Carolina, this limit is $453,100 for a single-family residence.

Jumbo mortgage products cover a variety of property types and even occupancy types like investment properties.

There are parts of the state where the conventional loan limit is as high as $625,500. In these areas a Conforming Jumbo product may be an appropriate option.

The majority of the programs thought of as jumbo products fall into the category of Non-Conforming Jumbo loans.

• Loan limits up to $2 million ($2,000,000)
• Most programs require a LTV of 80% or less
• Typical requires good credit

There are many special programs for a first time homebuyer. Some are designed to reduce the amount of money you need to put down while others are a tax reduction program to help you afford your payments.

These programs can also be combined in a lot of cases. Income levels and loan amount caps apply. Some programs have stipulations that you must remain in your home for a certain period of time or may be subject to a penalty.

Here we go over some of the most commonly used programs that can really help a first time homebuyer get a leg up. If you are interested in taking advantage of any of these programs please contact us to find out more.

The MCC program operates as a federal income tax credit. The MCC reduces an eligible borrower's federal income taxes and, in effect, creates additional income for the you to use in making house payments. NCHFA offers a 30% tax credit amount (50% tax credit for new homes).

For example, a loan amount of $100,000 at an interest rate of 5% for 30 years would amount approximately $5,000 of interest in the first year. With a 30% MCC, this borrower may be eligible to receive a federal income tax credit of $1,500 (30% x $5,000).

The borrower can even reduce the amount of monthly federal income tax withheld by filing a revised IRS W-4 Employee Withholding Allowance Certificate in order to have more disposable income to make loan payments.

This program is actually not only for first time homebuyers, but it can help by reducing the amount of money you need to put down out of pocket. NCHFA accepts 30-year fixed-rate FHA, VA, USDA and Fannie Mae HFA Preferred Conventional loan types under its N.C. Home Advantage Mortgage program. FHA loan types include FHA 203(b) loans and condominium 234(c) loans.

All loans financed under the NC Home Advantage Mortgage program must be purchase transactions. Both repeat buyers and first-time homebuyers are eligible for the down payment options, but borrowers may only have one outstanding NCHFA loan at a time.

• 5% Down Payment Assistance for FHA, VA and USDA loans
• 3% Down Payment Assistance for Conventional loans

Fannie Mae and Freddie Mac both offer a special 97% Conventional product for first time homebuyers. The programs a very similar with very minor differences.

• Maximum 97 percent LTV and 105 percent TLTV ratios
• Preferable mortgage insurance options
• No reserves required for 1-unit properties
• Online homebuyer education required

• As low as 3% down payment
• Preferable mortgage insurance options
• No reserves required for 1-unit properties
• Online homebuyer education required

Mortgage insurance lowers the risk of offering a loan to you, so you can qualify for a loan that you might not otherwise be able to get.

Typically, borrowers making a down payment of less than 20 percent of the purchase price of the home will need to pay for mortgage insurance. Mortgage insurance also is typically required on FHA and USDA loans. Mortgage insurance lowers the risk to the lender of making a loan to you, so you can qualify for a loan that you might not otherwise be able to get. But, it increases the cost of your loan. If you are required to pay mortgage insurance, it will be included in your total monthly payment that you make to your lender, your costs at closing, or both.

• Lump Sum Mortgage Insurance Premium can either be financed into your loan or paid out of pocket at closing
• Annual Mortgage Insurance Premium is paid monthly as part of your mortgage payment
• Hybrid Mortgage Insurance Premium combines both Lump Sum & Annual Mortgage Insurance options

Conventional Loans require mortgage insurance known as Private Mortgage Insurance (PMI) when you put less than 20% down on a mortgage. PMI can take the form of any of the options listed above. We will run the scenarios to determine your best financial choice.

Conventional loans allow for us to pay your mortgage insurance premium for you. In return you must accept a higher interest rate. Depending on your situation this may be a good option to improve your cashflow.

Most Conventional products allow for the removal of mortgage insurance once your Loan to Value (LTV) is reduced to 78% or lower.

All FHA loans will require mortgage insurance regardless of how much you put down. You will have to pay the Up Front Mortgage Insurance Premium (UFMIP) at closing and will have an annual mortgage insurance premium added to your payment.

FHA monthly mortgage insurance is required for a minimum of 11 years, but could last as long as the term of the loan.

VA loans call their lump sum premium the VA Funding Fee. This fee is determined by a few factors:

• Your type of military service
• Your down payment amount
• Your disability status
• Whether you’re buying a home or refinancing
• Whether this is your first VA loan, or you’ve had a VA loan before

There is no annual mortgage insurance.

Similar to FHA mortgages, USDA loans require their Upfront Guarantee Fee be paid at closing and also included mortgage insurance as part of your monthly payment.

USDA's annual mortgage insurance is active for the life of the loan.