Owning a home is the great American dream, and Marc Coons the Paso Robles home lender has made it a mission to help as many individuals and families as possible realize that dream. One of the first things to understand is the basics of how lenders charge interest on the loan. Interest is how the lender earns money for loaning the money to buy the home.
- A fixed-rate mortgage is one for which the interest rate never changes. The advantage is that your loan payments are predictable because you don’t have to worry about fluctuations in interest rates causing they payment to increase. The disadvantage is that if interest rates drop, you are still paying a higher interest rate. This is the time you may want to consider refinancing to take advantage of lower interest rates.
- An adjustable-rate mortgage (ARM), sometimes called a variable-rate mortgage is a home loan that may have periodic changes to the interest rate. These types of mortgages often feature a low fixed rate for some portion of the loan at the beginning before the adjustment period begins. An ARM loan is a common purchase strategy from home buyers who are not planning on staying in the home for a long time. A single home-buyer or a young couple buying their first home with the intent to sell in a few years often take advantage of an initial low-interest period with an ARM loan.
Depending on the source of your loan, the “rules” differ and often in favor of the borrower. The sources include:
- Conventional loans from banks, credit unions and mortgage companies
- Jumbo, FHA, USDA, VA and 203(k)
- Construction loans
- Equity loans and HELOC (lines of credit)
One of the first things that happens when you work with Marc Coons and his team of professional loan consultants is a review of your financial profile so your consultant can advise you about the best lender for your Paso Robles home.
Jumbo, FHA, USDA, VA and 203(k)
- A jumbo mortgage is a loan for properties with values that are greater than the limit set by the Federal Housing Financing Agency (FHFA). Jumbo loans are often used to buy high-end properties and are guaranteed by Fannie Mae or Freddie Mac. A borrower needs a high credit score, high cash reserves and a high income.
- An FHA mortgage is a government-backed loan insured by the US Federal Housing Administration. These types of loans can only be made by FHA approved lenders and have fewer restrictions placed on borrowers which make qualifying fairly easy. Down payments are usually lower. An FHA mortgage is a good option for a home buyer with lower credit scores and can’t afford the usual 20% down payment. ‘
- The FHA also offers 203 (k) loans for properties that are considered “distressed;” properties that need work like a new roof, structural repairs, landscaping, upgraded heating system, energy conservation improvements and more.
- A Veterans Administration (VA) mortgage is a loan backed by the Department of Veterans Affairs and available for qualified military service members and veterans. The VA doesn’t require a minimum credit score to qualify, but the lender may have borrower requirements. The mortgage payments are usually lower than other types of mortgages. Only qualified VA lenders can offer this kind of mortgage.
- A USDA mortgage, offered through the United States Department of Agriculture’s Rural Development Guaranteed Housing Loan Program, also generally have lenient requirements to qualify but may have some associated fees. These loans are popular in rural areas but have limits on income and property value.
A construction loan is a short-term loan that covers the cost of building a home. It can either be paid at the end of the loan term, or converted into a traditional mortgage. Construction mortgages usually have stricter qualifications and higher interest rates.
The funds are paid out on a schedule that is agreed upon by the borrow, the builder and the lender and the funds are paid directly to the builder.
If you are building a new home anywhere on the Central Coast the Paso Robles home lender has the resources to get the best construction loan possible for your circumstances.
Home equity loans
The home is an asset and sooner or later, home owners turn their thoughts to borrowing against the equity for any number of reasons. There are a couple types of loans that let owners tap into their equity as a financial resource:
- Home Equity Lines of Credit (HELOC) A home equity line of credit is a revolving source of funds, much like a credit card, that you can access as you choose.
- An equity loan that is a fixed amount borrowed on the equity in the home.
Home equity loans and lines of credit are secured by the value of home’s equity. Eligibility for either of these types of loans depend on a number of factors including employment history, income and credit score.
Other loan options
Two additional loan options are the balloon mortgage and the bridge mortgage:
- Balloon mortgages have a balance due in a final lump payment at the end of loan term. More commonly used for commercial real estate, some home buyers find benefit in a balloon mortgage.
- Bridge mortgages can be useful for current homeowners looking to buy a new property before the current property sells. Normally short-term loans of a year or less bridge loan payments can be interest only until the original property sells. However, there is a risk that the borrow could wind up paying for two mortgages if the current home doesn’t sell in a timely manner.
Not all lenders offer these types of mortgages, but there are circumstances when either of these options is worth an investigation.
Benefits of working with the local lending expert
Marc brings over 17 years of experience as a residential Loan Consultant to help individuals, families and business owners. A Central Coast resident for 30 years, Marc is committed to supporting the local communities through solid connections and wonderful relationships.
Years of living, working and relaxing on the Central Coast has given Marc a deep understanding and a unique appreciation for the individuals and families who make their homes here.
Recognizing that each customer has specific needs, Marc applies his experience, along with Caliber Home Loan’s superior in-house-local processing, underwriting and closing talents to assure a smooth loan process from application to moving in. Caliber Home Loans, founded in 2008, has over 5000 employees across 160 companies and generates $1.73 billion in sales.