Loan Programs

Fixed Rate Mortgages (FRM)
The most common type of loan option, the traditional fixed-rate mortgage includes monthly principal and interest payments which never change during the loan’s lifetime.  Almost all types of Conventional and Government loans offer this standard product.

Adjustable Rate Mortgages (ARM)
Adjustable-rate mortgages include interest payments which shift during the loan’s term, depending on current market conditions. Typically, these loans carry a fixed-interest rate for a set period of time before adjusting.  Most conventional and government loans offer this product.

FHA Loans
FHA home loans are mortgages which are insured by the Federal Housing Administration (FHA), allowing borrowers to get low mortgage rates with a minimal down payment.

VA Loans
VA loans are mortgages guaranteed by the Department of Veteran Affairs. These loans offer military veterans exceptional benefits, including low interest rates and no down payment requirement. This program was designed to help military veterans realize the American dream of home ownership.

USDA Loans
100% Financing low interest rate loans for properties located in USDA eligible rural areas and for borrowers who meet the USDA maximum income qualifications.  Purchase, Refinance, and Escrow Holdback for rehab purchases. 

 RENOVATION Loans 

Renovation loans allow a borrower to simultaneously refinance or purchase an existing home and combine the costs of the renovations to improve the property based on the future value of the home.  It is a one-time close loan that does not need to be refinanced at the end of the construction or renovation period.  This product is great for those that don't have the ability to finance renovations via other conventional means such as credit cards, additional financing with higher rates and shorter terms or with cash.  

Typical Renovation Products include: FHA 203K (Standard, Limited, and Escrow Holdback), FNMA HOMESTYLE RENOVATION, FREDDIE MAC CHOICERenovation, VA RENOVATION, and USDA ESCROW HOLDBACK.

It's important to work with experienced consultants with this type of loan product.  At American Nationwide Funding, you can be assured of getting the right guidance from certified, knowledgeable and experienced loan consultants.


REVERSE MORTGAGES 

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Call our Home Loans Experts at (636) 530-9700 to begin your mortgage application, or apply online to review your loan options. 

 What Is A Reverse Mortgage?

 A reverse mortgage is a loan that allows homeowners over the age of 62 to convert a portion of their home equity into cash. This type of loan is especially appealing to people who want, or need, to supplement their retirement funds.

 How Does A Reverse Mortgage Work?

 A reverse mortgage works by using a portion of your home equity to first pay off your existing mortgage on the home – that is, if you still have a mortgage balance.

 You are not required to make monthly payments on the reverse mortgage because the loan balance doesn’t come due until the final borrower moves out of the home, passes away, fails to pay taxes or insurance, or neglects to maintain the home.

 While you are not required to make monthly payments, doing so could reduce your monthly interest or prevent it from accruing altogether. If you choose not to make a monthly payment on the loan, interest for that month will get added to the total loan balance.

 After paying off your existing mortgage, your reverse mortgage lender will pay you any remaining proceeds from your new loan. If you own your home free and clear, you’ll receive all of the proceeds from the loan since you do not have a mortgage balance to pay off first.

 As the homeowner, you get to choose how you want to receive your funds.

 

What Can A Reverse Mortgage Be Used For?

 Whether you need financial assistance or just want access to more funds while you live your retirement and reach other financial goals, there are several reasons why you may want to consider a reverse mortgage.

  •          Eliminate or lower monthly mortgage payments
  •          Consolidate Debts
  •          Pay for in-home care
  •          Make home improvements
  •          Purchase a new home with a home equity conversion mortgage for purchase
  •          Supplement income to allow other assets to grow in value
  •          Create an emergency fund or increase savings
  •          Protect home equity from declining home markets
  •          Have access to the net worth tied up in your home

 What Responsibilities Come With A Reverse Mortgage?

 It’s important to remember that a reverse mortgage is still a loan and, as the homeowner, you still have responsibilities tied to the loan and to the home.

  •          Pay property taxes and homeowners insurance.
  •          Keep the home in good condition, complete repairs and maintenance.
  •          Live in the home for more than half the year as your primary residence.

 If you do not stay current on your taxes and homeowners insurance, fail to maintain the home, or live in the home for less than 6 months of the year, your loan may come due.

 However, if you uphold the loan obligations listed above, your reverse mortgage will not come due until the last borrower moves out of the home or passes away. When this happens, the home is sold, and the proceeds of the sale are used to pay the loan balance in full with the remaining sale proceeds going to your heirs or family trust.

 A reverse mortgage is a non recourse loan. That means if the home sells for less than what is owed, you or your heirs will not be responsible for paying the difference. Depending on the type of reverse mortgage you get, the FHA or the lender will cover the difference and absorb the cost.

 On the other hand, if the home sells for more than what is owed on the loan, the remaining money is given to you or your heirs.

 Who Is Eligible For A Reverse Mortgage?

 To be eligible for a reverse mortgage, you must meet the following criteria, at a minimum:

  •          You must be 62 years or older.
  •          You must have enough equity in your home – about 50%, but the required amount varies by lender.
  •          You must attend a counseling session from a Department of Housing and Urban Development-approved counselor to learn more about the loan and your options.
  •          You must go through a financial assessment to ensure you are in the best position to be successful with your loan.

 Along with these requirements, your home also needs to qualify for the loan. Here are a few basic requirements:

  •          The home must be your primary residence.
  •          The home must be in good condition and meet FHA standards.
  •          The home cannot be a mobile or manufactured home.
  •          If the home is a condo, it must be on the HUD/FHA approved condo list. If it is not, you may still be eligible for a proprietary reverse mortgage.

 How Much Does A Reverse Mortgage Cost?

 Just like a traditional mortgage, there are costs associated with getting a reverse mortgage, specifically the Home Equity Conversion Mortgage (HECM). These costs are typically higher than those associated with a traditional mortgage. Here are a few fees you can expect.

 Upfront MIP: The upfront mortgage insurance premium (MIP) is paid to the FHA when you close your loan. The MIP protects you and the lender by making the loan a nonrecourse loan. If the home sells for less than what is due on the loan, this insurance covers the difference so you won’t end up underwater on your loan and the lender doesn’t lose money on their investment.

 It also protects you from losing your loan if your lender goes out of business or can no longer meet its obligations for whatever reason. In that case, FHA takes over so you can still access your loan proceeds.

 The cost of the upfront MIP is 2% of the appraised value of the home or $726,535 (the FHA’s lending limit), whichever is less. For example, if you own a home that’s worth $250,000, your upfront MIP will cost around $5,000.

 Along with an upfront MIP, there is also an annual MIP that accrues annually and is paid when the loan comes due. This charge is usually around .5% of the loan balance.

 Origination fee: The origination fee is the amount of money a lender charges to originate and process your loan. This cost is 2% of the first $200,000 of the home’s value plus 1% of the remaining value after that.

 The FHA has set a minimum and maximum cost of the origination fee, so no matter what your home is valued, you will not pay less than $2,500 or more than $6,000.

 With the same $250,000 home mentioned above, the origination fee would cost around $4,500 (2% of $200,000 and 1% of $50,000).

 Servicing fee: The servicing fee is a monthly charge by the lender to service and administer the loan and can cost up to $35 each month.

 Appraisal fee: Appraisals are required by HUD and determine the market value of your home. While the true cost of your appraisal will depend on factors like location and size of the home, they generally cost between $300 and $500.

 Third-party charges: These are the smaller charges from businesses other than your lender. These costs may include:

  •          Credit report fees: $30 – $50
  •          Document preparation fees: $50 – $100
  •          Courier fees: $50
  •          Closing fee: $150 – $800
  •          Title insurance: Depends on your loan and location

 Most of these costs can be rolled into your loan, but you can pay any of them out of pocket, if you want to forgo financing them. Talk to your lender to get the most up-to-date costs as fees may change over time.

 What Are The Pros And Cons Of Reverse Mortgages?

 As with any major financial decision, you should weigh the pros and cons of getting a reverse mortgage and decide if it is right for you. We also recommend speaking to a financial advisor.

Pros

 Depending on your needs and financial goals, a reverse mortgage may benefit you in the following ways:

  •          You remain the owner of the home. Your name stays on the title.
  •          You can access your equity without selling the home or paying a monthly mortgage.
  •          There are no credit score requirements at this time, though credit history will be reviewed during a financial assessment.
  •          You are protected from declining home values since it is a nonrecourse loan.
  •          There are no restrictions on how proceeds are spent. In other words, you can use the funds on whatever you want or need.
  •          Even after the borrower dies, nonborrowing spouses who are not listed on the mortgage may still live in the home.
  •          If the loan comes due because you pass away and your heirs wish to keep the home, they can purchase the home for 95% of its appraised value or the balance of the loan – whichever is lower. They can also refinance that cost into a traditional mortgage. 

Cons

 Although there are a number of benefits that come with a reverse mortgage, the loan can also have some points that you will want to consider.

  •          Since you’ll be borrowing against the equity in your home, you’ll decrease your equity and increase your amount of debt.
  •          If you choose not to make payments, the loan balance will increase over time as interest accumulates.
  •          While heirs will have a few options for keeping your home after you pass away, you may not be able to pass on the home to your heirs without a cost to them.
  •          The loan may come due for several reasons. For example, the loan must be for your primary residence. If you do not live in the home for more than 6 months, the loan could come due. On the same note, a reverse mortgage will come due if you move out of the home or pass away. It could also come due if you fail to uphold your responsibilities of the loan, including maintaining the home and paying your property taxes and homeowners insurance.
  •          As stated above, you must continue to pay property taxes and homeowners insurance. If you do not stay current on these expenses, your loan may come due.
  •          There may be high closing costs and fees associated with the loan

"This material is not from HUD or FHA and has not been approved by HUD or a government agency."

Hybrid ARMs (3/1 ARM, 5/1 ARM, 7/1 ARM, 10/1 ARM)

Hybrid ARM mortgages combine features of both fixed-rate and adjustable rate mortgages and are also known as fixed-period ARMs.

Components of an ARM
Prior to choosing a home loan, you should know the advantages and risks of adjustable-rate mortgages to make an informed, prudent decision.

Commonly Used Indexes for ARMs
This article includes a list of the most commonly used indexes by ARM lenders that affect ARM mortgage rates.

Interest Only Mortgages
Interest only mortgages are home loans in which borrowers make monthly payments solely toward the interest accruing on the loan, rather than the principle, for a specified period of time.

Balloon Mortgages
Balloon mortgages include a note rate that remains fixed initially, and the principal balance becomes due at the end of the mortgage term.

Graduated Payment Mortgages
Graduated Payment Mortgages are loans in which mortgage payments increase annually for a predetermined period of time (e.g. five or ten years) and becomes fixed for the remaining duration of the loan. 

What kind of loan program is best for you?
Should you get a fixed-rate or adjustable rate mortgage? A conventional loan or a government loan? Renovation or a Reverse? Deciding which mortgage product is best for you will depend largely on your unique circumstances, and there is no one correct answer.  It's always best to consult with a knowledgeable and experienced mortgage advisor.

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