Special Programs

• FHA Loan

  The FHA, or Federal Housing Administration, provides mortgage insurance on loans made by FHA-approved lenders. FHA insures these loans on single family and 2-4 Units. Learn more about FHA loan requirements and guidelines by calling our experienced loan advisors.

  
  

  ADVANTAGES

  • 3.5% down payment, lower interest rates
  • Seller contribution accepted
  • Imperfect credit accepted
  • Easier to qualify

  DISADVANTAGES

  • Requires mortgage insurance, owner occupied properties only
  • May increase monthly payment by up to 25%
  • Loan amount up to $636,150 (each county has different loan limit, call our loan advisor to find out)
  • Program choice limited: 30/30, 5/15, 5/1 and 1/1 ARM
• Non-QM Loan

  After the most recent housing crisis, along with other regulatory reform, minimum standards for mortgages, including the Ability to Repay rule and a Qualified Mortgage definition was created in 2010. These were later adopted by the Consumer Financial Protection Bureau (CFPB) and put into action on January 10, 2014. The new rule provides banks and mortgage lenders with certain liability protection when originating Qualified Mortgage (QM) loans, which allows them to make home loans with less fear of buybacks, lawsuits, and financial loss. As a result, some lenders have begun to originate so-called “non-QM loans,” which as the name implies, do not comply with the Qualified Mortgage rule. This type of loan doesn’t conform to the Qualified Mortgage definition issued in 2010. Typically offered by private investors and some banks.

  
  

  ADVANTAGES

  • Easy to qualify
  • Less strict requirements on income (debt ratio up to 55%) and credit
  • Alternative assets can be used for qualification
  • Interested Only payment options--low payment with flexibility to pay down principal at your convenience
  • Stated income loans--income not reported on tax returns can be used to qualify
  • 40 year loans--lower payment and easier to qualify
  • Negative Amortization ARM--low and stable payment plans

  DISADVANTAGES

  • Higher interest rates (anywhere from 0.5% to 2%)
  • Loan may have shorter initial terms (1-5 years)
  • May contain prepayment penalty
• Reverse Mortgage

  A reverse mortgage is a type of home loan for older homeowners (age 62+) that requires no monthly mortgage payments. Borrowers are still responsible for property taxes and homeowner's insurance. Reverse mortgages allow seniors to access the home equity they have built up in their homes now, and defer payment of the loan until they die, sell, or move out of the home. Because there are no required mortgage payments on a reverse mortgage, the interest is added to the loan balance each month. The rising loan balance can eventually grow to exceed the value of the home, particularly in times of declining home values or if the borrower continues to live in the home for many years. However, the borrower (or the borrower's estate) is generally not required to repay any additional loan balance in excess of the value of the home.

  
  

  ADVANTAGES

  • No monthly payment
  • Do not need income, credit, or asset to qualify
  • Receive payment from bank every month

  DISADVANTAGES

  • Restricted to seniors 62 years of age or older only
  • Higher interest rate
  • Deplete home equity for heirs
  • Low loan-to-value ratio
  • Higher loan fees, hidden fees

Unique Situations

• Low income?

  Lenders require that your monthly mortgage payment (principal, interest, taxes and insurance) plus debt payments does not take up more than 43% of your monthly income. This is known as the debt-to-income ratio. However, if you are looking to purchase a home whose mortgage payment goes above this ratio, we can:

  • Find a lender with a higher debt-to-income ratio. There are less of them, but they do exist
  • Convert your assets to “income” in the eyes of the lender. If you have investment accounts with stocks, mutual funds or bonds, we can document that to increase your income.
  • Use restricted stocks to increase your income, if you have been receiving it for 2 year and there are still vestings coming for the next 3 years
  • Go for Non-QM loans
• Credit problems?

  Many lenders have credit score thresholds (680 for conforming loans and 720 for jumbo loans). A low credit score can significantly impact the cost and interest rate of your loan. If you have credit score below these thresholds, we can:

  • Help you to try and repair your credit in a very short amount of time
  • Choose lenders that allow a low-credit score, typically with higher interest rates (The Loan Story has partner lenders with thresholds as low as 500)
  • Apply for an FHA Loan
  • Apply for a Non-QM Loan
• Need cash?

  Do you have lots of home equity already but are short on cash? We can:

  • Help you refinance with lenders who offer unlimited cash-out refinance (you can pocket as much as 2 million if your house value is high enough)
  • Set up a reverse mortgage which offers monthly cash payments from the bank to you like an annuity
• Short job history?

  Typically lenders require 2 full years of employment history in the same line of work to qualify for a loan. If your job history does not match those requirements, we can:

  • Find niche programs to fit your needs, such as ones that accept job history from a foreign country
  • Use your educational history to make up for your job history
  • Use our partner lenders who only require 6 months of history
• Short on down payment?

  Most lenders are looking for 20% or more down payment. Loans that are over 80% are considered higher risk, and lenders will typically require you to buy mortgage insurance for those loans. This will reduce your purchasing power and increase your monthly payment. In this case, we can:

  • Eliminate mortgage insurance by splitting your loan into first and second loans (e.g. 80% first loan, 10% second loan)
  • Accept cash gifts for down payments from family members
  • Borrow against your 401k or life insurance policy
  • Use equity in other properties to pay down the new purchase (cross-collateral loans)
  • Go for low down programs such as 1% down, FHA, VA, and down payment assistance programs from specific cities or counties
• First time homebuyer?

  There are federal and state sponsored programs to help first-time homebuyers. The funding is typically distributed through specific cities or counties.

  • Mortgage credit certificate: offers 15-20% of annual mortgage interest back as your tax credit
  • Varies by city. Contact Travis von Hoopes, our specialist, to find out more
• No green card?

  Lenders prefer buyers to have either a green card or U.S. citizenship. If you don’t have either, they will need to examine your visa and work authorization to determine loan eligibility. The solutions to this varies depending on your unique situation and type of visa, but The Loan Story has lending sources to handle all types of visas, even ones without social security numbers. Contact us to discuss in more detail.

Commercial Lending

• Land and Construction

  Lenders have very different requirements for land and construction loans. Land loans are considered by the lenders as high risk because it is much easier for owners to walk away from a piece of land than a home. Therefore, how you plan to use the land is critical to the lender. It also impacts the rate and term. Most of lenders wish to loan on ready-to-build lands, meaning that it has road, access, city sewage & water, and access to electricity. Also, a higher down payment is required.

  Common beliefs:

  • Land loans can be secured with 20% down payment. FALSE, requires at least 40- 50% down payment
  • Any piece of land can be constructed upon. FALSE, must be improved with road, access, sewer and water--ready to build
  • Any piece of land can secure a loan. FALSE, raw land is very difficult to secure financing
• Apartments

  In the U.S., an apartment is defined as a legal parcel with 5 or more units. Qualification for the apartment loan is different than residential loans in that it is based primarily on the apartment's income after operating expenses (utilities, maintenance/repair, administrative management... etc) rather than your personal income. In addition, complexes with 16+ units are required by law to have a residential manager, which can greatly increase expenses.

  Lenders for apartment loans tend to be location-specific and may decline your loan purely based on location. Thus, the most important information to have on hand while inquiring for an apartment loan is its location, unit distribution (# units + bedroom/bathroom count), estimated rental income, and estimated operating expenses. Apartment loans typically take 45-60 days to close because appraising multiple units can take a long time.

  Common beliefs:

  • I make a lot of money, I can get this apartment! FALSE, the loan depends on the apartment's income, not yours
  • Income = number of units x rent of each unit. FALSE, if the units are not occupied, they won't be counted in the appraisal
  • The interest rate is very expensive, FALSE, it is only slightly higher at 3.625%-4.99%
  • I can always refinance. FALSE, there are very expensive prepayment penalties if you pay off the loan early
• Commercial Space

  Loans for commercial spaces come in many shapes and sizes. The most common cases are: office, medical, warehouse, and retail. Commercial loans can be divided into two categories - owner occupied and leased. If you are not planning to run your own business in the space but are simply leasing out to other businesses, it is considered a leased property. In this case the loan calculations are very similar to apartment loans (based off rental income after operating expenses). If you are leasing to your own business, then it is considered owner occupied and you get benefits such as more favorable interest rates and government loans. Commercial loans typically take 60-90 days to close, 2-3x longer than a regular loan, because of all the additional inspections that have to be done based on the type of business (e.g. environmental inspections, food safety inspection... etc etc).

  Common beliefs:

  • The interest rate is higher. TRUE, rates tend to be 1-3% higher than residential rates
  • I can always refinance. FALSE, there are very expensive prepayment penalties if you pay off the loan early