Mortgage Guide

Your Guide to Mortgages

You're ready to buy - or at least, getting more serious about starting the process. But where do you begin?

I'm ready to help with Allen Tate Mortgage. Starting the mortgage process can be a bit intimidating, and navigating the loan process even more overwhelming. I can help you reach your destination smoothly and enjoy the journey to homeownership.

So what are you waiting for? Grab your pencil, and let's get started on buying a home.

Step 1: Get pre-qualified or pre-approved.

Pre-qualification is an informal discussion between you and a lender. The lender estimates the amount you can borrow based only on what you tell him or her about your assets. This can help you determine how much you can afford for a home. There is no formal verification of the information you give to the lender for pre-qualification, so the lender is not bound to make the loan when you are ready to buy.

To a seller, a lenders pre-approval letter is considerably stronger than a pre-qualification letter. If a seller knows your financing is secure, your offer is stronger and helps me to be able to negotiate to your advantage. Pre-approval gives you peace of mind as you search for a home, because you know you will qualify for the pre-approved mortgage amount.

Step 2: Decide on a lender.

An Allen Tate Mortgage Consultant can help you understand the full range of mortgage products and programs at your disposal. From low down-payment programs to fixed-rate loans, Allen Tate Mortgage will introduce you to different types of mortgage products and help determine which loan options may be best for your financial situation and the type of home you plan to buy.

An Allen Tate Mortgage Consultant will answer all of your questions, make you feel at ease throughout the process - and make you wonder why you ever considered talking with anyone else.

Step 3: Know what loan types are available and decide whats right for you.

Conventional Loans

A conventional loan is a mortgage loan that meets the underwriting guidelines of Federal National Mortgage Association (FNMA), known as Fannie Mae; or Federal Home Loan Mortgage Corporation (FHLMC), known as Freddie Mac, as opposed to a government-backed loan. Generally, conventional loans require a higher down payment than government loans and are limited to a certain amount (currently $417,000).

Non-Conforming Loans (Jumbo)

A non-conforming loan, also known as a jumbo loan, is a mortgage loan that exceeds the maximum loan limits established by Fannie Mae and Freddie Mac (currently $417,000). The down payment and average interest rates on jumbo mortgages are typically higher than for conforming mortgages.

Fixed-rate mortgage

A fixed-rate mortgage is a home loan in which the interest rate will remain the same through the life of the loan for the original borrower. The most common fixed-rate mortgage terms are 15 or 30 years, but loans may also be available for 10, 20 and 25 years.

Fixed-rate mortgages are characterized by their interest rate (including compounding frequency, amount of loan, and term of the mortgage) and are known for their ease of comprehension among borrowers. Unlike adjustable-rate mortgages, fixed-rate mortgages are not tied to an index. Instead, the interest rate is set to an advertised rate, usually in increments of 1/4 or 1/8 percent.

Fixed-rate mortgages are usually more expensive than adjustable-rate mortgages. Long-term fixed-rate loans will tend to be at a higher interest rate than short-term loans because of increased risk. They are usually available as 30-year, 15-year, 10-year, 20-year or 25-year fixed rate.

Adjustable-Rate Mortgage (ARM)

An adjustable-rate mortgage (ARM) is a home loan in which the interest rate changes periodically based on a standard financial index. ARMs generally permit borrowers to lower their initial payments if they are willing to assume the risk of interest rate changes. They transfer part of the interest rate risk from the lender to the borrower, who benefits if the interest rate falls but loses if the interest rate increases. This creates the risk of financial hardship to the borrower. To limit this risk, most ARMs have caps on how much an interest rate may increase over the initial term and life of the loan.

  • 1 YR ARM - Interest rate may adjust after one year
  • 3/1 ARM - Interest rate is fixed for 3 years, but then may adjust annually.
  • 5/1 ARM - Interest rate is fixed for 5 years, but then may adjust annually.
  • 7/1 ARM - Interest rate is fixed for 7 years, but then may adjust annually.
  • 10/1 ARM - Interest rate is fixed for 10 years, but then may adjust annually.

Government Loans:

FHA Loans

An FHA Loan is a government mortgage loan partially insured by the Federal Housing Administration, which covers lenders in most losses if a borrower defaults. FHA loans have historically allowed buyers to borrow money for the purchase of a home that they would not otherwise be able to afford. Typically, a reduced down payment of 3.5 percent is required. FHA loans are assumable for owner-occupant borrowers.

VA Loans

A VA loan is a government mortgage loan guaranteed by the U.S. Department of Veterans Affairs (VA) and issued by qualified lenders. VA loans are made to active duty and honorably discharged veterans and their un-remarried widows or widowers. VA loans offer lower interest rates and require a minimal down payment or no down payment.

USDA (Rural Housing Loans)

A rural housing loan is a government mortgage loan guaranteed by the U.S. Department of Agriculture (USDA), which allows 100 percent financing. The home must be located in a designated USDA area and the borrowers must have certain income limits to qualify.

NC/SC State Housing Loans

Bond loans are government mortgage loans made through state-sponsored loan programs to lower the cost of homeownership for low-to-medium income borrowers, sometimes for targeted occupations or neighborhoods. This type of loan may include State Down Payment Assistance, which varies by amount and is offered subject to income limits.

Not all programs may be available.

Talk to me about a home mortgage.

If you think home loans are one size fits all, theres a good chance youve never had a mortgage-or a knowledgeable mortgage advisor. As an Allen Tate agent, its my goal make sure you get the right loan product. An Allen Tate Mortgage Consultant will start by asking the right questions, reviewing your financial situation in great detail, and presenting you with the best options available in the marketplace today.

Your overall satisfaction with the entire home buying process is how I measure success.