FiveBestMortgages.com.
rolls out the red carpet for people who are
buying a home. Our seasoned mortgage professionals
and certified Real Estate Professionals offer
a free analysis that will enable you to be pre-approved
for a loan. This analysis is based on your credit,
income and down payment. Even if you don't have
a house picked out, you can obtain an approved
loan amount!
Our seasoned mortgage professionals provide
quality service and innovative mortgage programs
for the more difficult loans. We also provide
the most competitive rates in the industry and
believe that service to our clients is of the
utmost importance.
True No Income/No Asset
Loans
Let the professionals help you take advantage
of the only TRUE no income/no asset loan in
the industry. They have financing specifically
arranged for those special borrowers who require
privacy when it comes to their earnings. Self-employed
and salaried employees will qualify, save yourself
the hassle and headache of trying to explain
your way around past income fluctuations, sporadic
employment or a career change. Best of all,
for those in cash businesses, there is no need
to sign a form 4506. It truly is the best money
available.
Poor Credit and Non-Conforming
Loans
Our seasoned mortgage professionals are industry
leaders when it comes to getting the tougher
loans closed. Many of the loans they assist
in funding are of the nonconforming nature.
In today's economy, hardly anyone has perfect
credit. Over the period of our lives, at one
time or another, we will experience financial
difficulties. If you have had slow credit, mortgage
lates, bankruptcies, and even foreclosures,
they have a program for you.
A List of some of your
choices:
15 Year Fixed
30 Year Fixed
CODI
3/1 Arm
5/1 Arm
7/1 Arm
15 Year Fixed Jumbo
30 Year Fixed Jumbo
CODI - Super Jumbo
5/1 Jumbo Arm
* Purchases
* Refinancing
* Debt Consolidation
* Cash out for Investment
* Home Improvement
* Construction
* Credit Difficulties
* Foreclosures
* Bankruptcies
Our seasoned mortgage professionals offer a
wide variety of lending options. Whether a purchase,
refinance, home equity loan/credit line, or
new construction. They obtain interest rates
from a wide variety of lending institutions
and put you in the program that suits your needs.
Conforming and
Non-Conforming Banks / PMI
Depending on a borrowers qualifications they
can go to either a conforming (typical name
brand local and national banks i.e.: Bank of
America, Wells Fargo, Seattle First Bank, etc.)
or a non-conforming bank (Lending Institutions
that normally have private investors). Interest
rates are generally lower at a conforming bank,
but have more guidelines, restrictions, and
PMI for loans over 80% of the subject properties
value. Interest rates are slightly higher at
non-conforming banks, but they are more flexible
on their conditions and they do not charge PMI.
PMI = Principle Mortgage Insurance. This is
a policy the Conforming bank requires the borrower
to purchase in the event the loan is over 80%
of the subject properties value. The Insurance
pays 20% of the loan to the bank in the event
the loan is defaulted on.
Both conforming and non-conforming lending
institutions have 80%/90%/100% loan programs
(as well as in between). A borrowers credit
will determine which lending institution they
can qualify with. Interest rates are generally
higher as the LTV increases.
Fixed-Rate Mortgage
When interest rates are low you want to lock
into a fixed rate and take advantage of the
long term benefits of paying lower interest.
This is the best option if the future looks
like interest rates will be on the rise.
Adjustable-Rate Mortgages
At the time of your initial finance, adjustable
rate mortgages are initially lower than a fixed
rate mortgage, but will increase over a few
years. Adjustable rate mortgages are good if
your immediate financial situation requires
a lower payment or if your credit needs improvement
and your looking to get yourself established
in a mortgage. Once someone establishes a mortgage
payment history, and if fixed interest rates
have gone down, borrowers usually refinance
into a fixed interest rate.
30-year/15-year/10-year
The shorter the term of the loan means the
less interest a borrower pays over the term
of the loan saving the borrower money. Borrowers
should keep in mind that the shorter the loan
term the higher the monthly mortgage payment.
Full Doc or Stated
Full documentation means the borrower is going
to provide detailed employment, income, and
financial information and it will be verified
by the lending institution. Stated means the
borrower is going to State their employment,
income, and financial information and it is
not verified by the bank. Borrowers generally
need a higher credit score in order to qualify
for most Stated programs. Interest rates are
generally higher for Stated program, but it
may be the program for you if you are self employed
or want to obtain the house you desire.
Option ARMs (Adjustable
Rate Mortgages)
The most popular ARM is a flexible financial
tool that helps make your money work for you.
Choose from four different payment options every
month.
Traditional ARMs
(Adjustable Rate Mortgages)
These loans begin with an interest rate that
is lower than a comparable fixed rate mortgage,
but the rate changes at specified intervals.
Start with the stability of a fixed-rate mortgage
then convert to the flexibility of an ARM. Choosing
an ARM with an index that reacts quickly lets
you take full advantage of falling interest
rates. Most ARM's have a low introductory rate,
which is good anywhere from 1 month to as long
as 10 years.
Fixed-Rate Mortgages
The most common type of mortgage program where
your monthly payments for interest and principal
never change. Enjoy stable monthly payments.
Home Equity Loans and Home Equity Lines of Credit
(header)
A flexible and convenient way to tap the equity
in your home.
Reverse Mortgages
A Special type of loan made to older homeowners
to enable them to convert the equity in their
home to cash to finance other needs.
Balloon Mortgages
Short term mortgages that have some features
of a fixed rate mortgage.
Interest Rate Buydowns
The buyer would pay points above current market
points in order to pay a below market interest
rate during the first two years of the loan.
At the end of the two years they would then
pay the old market rate for the remaining term.
Cost of Funds Index
(COFI)
The ratio of the dollar amount paid in interest
during the month to the average dollar amount
of the funds for that month constitutes the
weighted average cost of funds ratio for that
month.
Graduated Payment Method
(GPM)
With a GPM the payments are usually fixed for
one year at a time.
Choosing the best program and the right type
of mortgage for you depends on many different
factors.
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You Have Many Financing
Options:
Closing Costs Financed
Lenders usually allow all closing costs to
be paid through the refinance; except for the
appraisal. As such, except for the cost of the
appraisal, refinancing is ordinarily a zero
“out of pocket” transaction. However,
some lenders also require an application, processing
and/or credit fee to be advanced by the borrower
in addition to the appraisal fee.
Secondary Financing
Lenders allow secondary financing (2nd mortgages)
up to 100% CLTV (Combined –Loan to Value).
For example; if the outstanding balance owed
on your first mortgage is 80% of the value of
your home, lenders offer 2nd mortgage loans
up to 20% of the value of your home in addition
to that first 80% LTV (Loan to Value) mortgage.
Thus, your existing 1st mortgage would stay
intact “as is”; and a new 2nd mortgage
would be added to your debt on top of the 1st
mortgage.
The primary advantage to secondary financing
is that closing costs are substantially less
than closing costs associated with a complete
refinance of a 1st mortgage. A disadvantage
to secondary financing is that in proportion
to amounts borrowed, monthly payments tend to
run significantly greater than monthly payments
associated with 1st mortgages. This is because
with 2nd mortgages, interest rates usually run
higher and the numbers of years allowed for
paying back the loan are usually less.
As a general rule, if you’re planning
to sell your home within the next 2 years, secondary
financing may make sense. However, if you plan
to stay where you are for more than 2 years,
from a cash flow standpoint, it may make sense
to refinance your entire first mortgage to optimize
your monthly bottom line.
On the other hand, if cash flow is your primary
concern, once you’ve selected a lender,
you might want to ask your loan officer to run
the numbers both ways (for secondary financing
and complete refinance) so that you can select
your best option.
Deed Transfer/Refinance
A Deed Transfer/Refinance is much as it sounds.
It is a purchase transaction in effect. In most
cases it is required that the transfer be made
from a family member or close friend. A refinance
is ordered on the subject property by the new
potential owner and the deed to the property
is transferred simultaneously with the closing
of the refinance. With the correct set of circumstances,
this can be done as a “no money down”
transaction with all closing costs financed
into the deal.
Fast Closings / Fast Cash
Most lenders actually have the ability to arrange
“the lender’s part of the job”
for a fast closing in as little as 48 hours.
However, no matter how adept they might be,
they remain human and are also at the mercy
of the title search and real estate appraiser’s
schedule.
Although we have seen rushed closings come together
in 3 business days, a super rush almost always
takes 5-7. Beware of promises from any mortgage
lender or broker that promises a 3 day turn
around. If cash flow is pressing, try to plan
accordingly. If they tell you 3 days, count
on 7-10.
100% Financing
There are non-conforming lenders that offer
one hundred percent (100%) refinancing. Higher
credit scores can get offers for 100% refinancing
all within one (1) first mortgage. Lower credit
scores are usually offered an “80/20 combo”
which is an 80% LTV (Loan to Value) first mortgage
in combination with a 20% LTV second mortgage.
Home Loans after Divorce
Home Loans can usually be obtained by either
spouse after divorce for a fresh start for either
purchasing a new home or refinancing an ex-spouse
off of the deed.
Refinance Ex-Spouse off of Deed / Pay off Ex-Spouse
Provided you are in agreement with your ex-spouse
about a settlement amount; and there is sufficient
equity in the subject property, this can usually
be accomplished as follows: A refinance is ordered
in the name of the soon to be sole owner. At
closing the refinance is funded paying off the
existing mortgage plus the settlement amount
to the ex-Spouse. Simultaneously a new deed
is transferred to the new sole owner of the
property.
Often the new owner/borrower is able to draw
cash out funds from the same refinance to pay
creditors, clear up credit issues and/or cash
out for other personal reasons. It is usually
also possible to use the same type of refinance
and simultaneously add names to the new deed
such as a new spouse, family members and/or
other third party(s) that may want to share
in the ownership and mortgage responsibility
of the subject property. This can be helpful
if stronger credit of the third party and/or
the combined income of joint borrowers can bring
upon a lower interest rate—thus a preferable
monthly payment.
Credit Damaged by Divorce
or Ex-spouse
Everybody’s life situations are personal,
individual and rarely are any two divorce annals
identical; nor are they often uncomplicated.
The right lenders view divorce as an acceptable
reason for credit problems. It’s well
known that a divorce can damage the credit of
a credit worthy person.
Some lenders understand this; and unfortunately,
some say they understand it—but actually
do not understand it at all. Many lenders do
not see the “whole picture” and
therefore take the position that a borrower’s
credit was not damaged as a result of divorce
because the derogatory history stretches over
too long of a time period prior to the actual
time of the divorce. Some say the interest rate
offered should be high due to the risk factor.
Others refrain from making an offer.
However, the right lenders do understand that
although sometimes a divorce can be triggered
by a seemingly “overnight” situation,
it is usually not caused by an overnight experience.
As such, when divorce is a factor and a long
term credit damaging history prevails, the right
lenders may increase interest rates moderately
to offset some lender risk, but not do so abusively.
Success in dealing with these situations can
be simplified by knowing which lenders understand
divorce and which do not.
Home Equity Lines of
Credit
A Home Equity Line of Credit is a “revolving
loan”. It is usually in the form of a
first mortgage. However, it can be a first,
second or third position mortgage. In effect,
it works like a low interest rate credit card,
but it is secured against your home. Borrowers
can draw all or part of the credit line as desired.
Pay Creditors at Closing - Collections / Charge
Offs / Tax Liens / Judgments
When refinancing, most lenders allow any creditor
to be paid at closing; including collection
accounts, charge offs, tax liens, judgments
and/or other creditors. When timely closings
are required due to purchase contracts or agreements
between a Buyer and Seller, this can help meet
those time requirements.
Leave Collections Unpaid at Closing
If you owe money on one or several unpaid collection
accounts, some lenders will allow you to close
and leave those Collection Accounts Unpaid at
Closing if either of the following applies:
• On virtually any collection account
having less than $1,000 balance.
• On virtually any dollar amount for collection
accounts that are at least two years old.
Overcoming Poor
Credit or Income Problems
Credit Problems
Credit problems are usually caused during a
time period, several months or even years in
succession, during which an individual or couple
experience financial difficulties that were
impossible to control. Late payments on credit
cards, auto loans and/or other consumer debt
can occur throughout a time period resulting
in one, several or many accounts showing up
derogatory on a credit report. Credit problems
can be caused by an event, a period of problem
time, a single occurrence of cash flow problems;
or a string of events causing case flow problems.
The right mortgage underwriting can take this
into consideration. If a credit report shows
good credit prior to the problem, and if there
is an explanation for why credit will be good
in the future, intelligent mortgage underwriting
should provide a fair and reasonably priced
home loan.
Income Problems
Income problems are often caused by misfortune.
Illness, loss of a family member, lapse of employment,
career loss; and/or self employment issues can
produce a devastating effect on a person’s
income, cash flow and credit. Usually, people
that have experienced financial hardship as
a result of income problems simply need a fresh
start.
Extenuating circumstances, “outside of
your control”, can be an explainable cause,
and if there is a realistic expectation that
the problems have been resolved, the right lenders
will often provide a home loan with a reasonable
and fair rate for the home owner; often regardless
of prior income problems, or problem credit.
No Income Check and/or Non Provable Income
“No Income Check” and “Non
Provable Income” home loans and mortgages
are often used for borrowers to close fast when
proving income is either too complicated or
time consuming.
Dealing with Bankruptcy
or Foreclosure
Prior Bankruptcy
Depending on how long ago the bankruptcy, the
greater your chances for a conforming rate mortgage.
In addition, there are some lenders that provide
almost conforming rates with bankruptcy discharged
or dismissed only one year prior. That is in
the case of a chapter 7 bankruptcy. In the case
of a chapter 13 bankruptcy, there is usually
no need to wait until discharge has seasoned.
Current Bankruptcy
If you are currently in chapter 13 bankruptcy,
you may be able to qualify for a home loan.
In fact, some lenders can actually provide FHA
loans at low interest rates for borrowers in
chapter 13. re: HUD Handbook section 4155.1
Rev-4:
“A borrower paying off debts under Chapter
13 of the Bankruptcy Act may also qualify if
one year of the pay-out period has elapsed and
performance has been satisfactory, and the borrower
also receives court approval to enter into the
mortgage transaction.”
Prior Foreclosure
Depending on how long ago the foreclosure,
the greater your chances for a conforming rate
mortgage. However, most mortgage lenders are
generally more conservative when a previous
foreclosure is involved. As a general rule,
if the foreclosure is at least 2 years old,
wholesale nonconforming rates can usually come
fairly close to conforming rates. If the foreclosure
is more recent, offers with higher rates and
lower LTVs (Loan To Values) should be expected.
Current Foreclosure
If you are trying to refinance your home while
it is currently in foreclosure, the following
extenuating circumstances and/or compensating
factors may apply:
• Lower Debt Ratio.
• Substantial Down payment towards the
refinance.
• Explanation such as illness, loss of
employment, family death.
• Explanation why your financial situation
has improved and will continue to be stable
in the future.
If you are trying to refinance your home while
it is in foreclosure, consider the following:
sometimes you can. If you can’t prove
your income, you can usually borrow up to 50%
of the value of your house. However, if you
are able to prove your income, then you can
usually borrow up to 65% of the value of the
house.
Some people are able to convey a deed transfer
to a close friend or relative while simultaneously
refinancing the property in the name of that
3rd party. If that individual is credit worthy,
often up to 90% of the value of the house can
be borrowed which is usually enough to satisfy
or otherwise negotiate settlements with the
current mortgage company or other creditors.
This will often give the distressed homeowner
a chance to re-establish some credit and within
a year or so, take the house and a new mortgage
back into his or her name; thus relieving the
friend or relative of any further obligation.
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