One of the most important thing a potential buyer needs to know is what loan options are available to help them finance the home of their dreams.
Home Loan Options
One of the most important thing a potential buyer needs to know is what loan options are available to help them finance the home of their dreams. At Redwood Realty, we work hard to bring you a range of products designed to suit every buyer and every budget. We’ll work alongside you to make sure we find the product that works best for your individual needs.
Whether you qualify for a traditional mortgage, a Veteran’s Administration loan or you are purchasing a high value home and need a jumbo mortgage, we can help. We can provide you access to lenders offering fixed and adjustable rate mortgages with a range of repayment terms.
Understanding Pre-Approvals and Loan Commitments
If you are uncertain how much home you can afford, we can offer you a pre-approval. Pre-approvals help potential buyers understand how much money they will be eligible to borrow. Pre-approvals are subject to lender approvals but they also provide you with some basic guidelines while you are shopping for a home.
For those looking for more leverage during the home-buying process, we work with you to obtain a loan commitment. Loan commitments mean a lender has approved a loan at a specific amount at a certain interest rate. This allows you, the buyer to have far more leverage while shopping. Generally these are good for a period of time between 30 and 90 days.
Get a Rate Quote
Generally borrowers who are purchasing a single family home and need a mortgage of less than $417,000 will need to qualify for a conforming loan. These loans are typically backed by Fannie Mae or Freddie Mac.
Borrowers must qualify based on down payment, credit and will have to provide documentation verifying income and expenses as well as tax returns. A full credit check, verification of assets and up to three years of tax returns will be required for these loans.
FHA mortgage loans often allow borrowers to put down a smaller down payment. In some cases, the down payment may be as low as 3.5 percent of the overall purchase price. These loans may be used for purchasing and only FHA loans may be refinanced as an FHA loan.
Lenders often offer borrowers higher debt-to-income ratios. Borrowers will be expected to pay mortgage insurance and the loans are insured by the Federal Housing Administration. For many first-time buyers, these loans are the most advantageous.
When you need a mortgage higher than $417,000 you will need to qualify for a jumbo mortgage. Borrowers must have excellent credit and be prepared to provide the lender all necessary documents to verify income and assets.
In most cases, lenders will look for borrowers who have lower debt-to-income ratios, and a larger down payment. Since the maximum qualifying loan is $417,000 many California homeowners use jumbo loans.
30 Year Fixed Rate Loan
New homeowners often apply for a 30-year fixed rate loan. These loans offer a stable monthly payment for the full term of the loan meaning your loan costs are always stable. Borrowers who prefer a stable budget typically elect this type of loan program.
30 year loans can be used for purchasing a home or for refinancing an existing loan. Interest rates will vary depending on the credit of the borrower and the amount of the loan. At Redwood Realty, we’ll work with you to determine if this is the best loan option for your needs.
20 Year Fixed Rate Loan
When refinancing an existing mortgage, some borrowers do not wish to start all over with a 30 year mortgage. Some first-time homebuyers prefer a shorter mortgage period as well. This program offers not only a fixed rate but also a shorter repayment period.
Generally, a 20 year fixed-rate loan will offer borrowers a lower interest rate. Borrowers who have verifiable income that can support the shorter term often find it preferable to a 30 year loan. Because interest rates tend to be lower than 30 year mortgages, these are often the loans of choice for those who are refinancing.
15 Year Fixed Rate Loan
These loans offer all of the advantages of knowing what your mortgage payment will be every month while still offering a lower interest rate. Borrowers who have significant down payments or those who are refinancing their existing mortgage often take advantage of these loans.
Because lenders are accepting less risk than a 30 year mortgage your monthly payments will be lower thanks to a lower interest rate. This program is ideal for those who have had their current mortgage for more than 5 years and are interested in refinancing into a lower rate loan.
Those who have actively served in the military and spouses of deceased veterans may qualify for a VA loan. This program offers options including no down-payment and no private mortgage insurance. Veterans must obtain a certificate of eligibility before applying for a VA mortgage and at Redwood Realty, we can help you with all of the necessary paperwork.
If you qualify for a VA loan, we are fully prepared to work with you throughout the process. From obtaining your certificate of eligibility and working to find the right lender, Redwood Realty is committed to assisting veterans and their families.
Adjustable Rate Mortgage
Unlike a fixed-rate mortgage, these loans may have variable payments. There are specific programs that will reset your interest rate every six months or every 12 months based on market factors. Adjustable rate mortgages (ARMS) are often used by borrowers who are seeking jumbo mortgages or those who are purchasing or refinancing a home they plan to be in less than five years.
Adjustable rate mortgages allow many borrowers to qualify to borrow more money than a fixed-rate mortgage because they start off with lower rates. If you are considering an adjustable rate mortgages, Redwood Realty can explain the options available to you and help ensure you understand the risks and rewards.