WHO

Borrowers who have investment capital they want to use as a down payment instead of cash.

OVERVIEW

Pledged-Asset Mortgages, also referred to as Asset-Backed, or Asset-Integrated Mortgages, are specifically designed for borrowers who have sufficient income to make monthly payments toward a home, but who have all their ready cash tied up in some sort of investments. The Pledged Asset Loan Program allows up to 90% financing on the property value. By Pledging Assets, a borrower eliminates the need to liquidate assets to obtain the cash needed for a down payment, avoids capital gains taxes associated with such liquidation, maintains a more liquid position, and continues to benefit from any future earned interest, dividends, and appreciation in their pledged assets.

Here’s how a Pledged Asset Mortgage works: Example - Purchase price $1,625,000. The loan program requires 35% down. A borrower would use 10% as the cash down payment. The remaining 25% is in the form of a Pledged Asset. The Pledge Account is held by the Investor, but the obligor is permitted to trade in the pledged account. Pledge Accounts may be released after 36 months, at the investor’s discretion, if a new appraisal shows the current Loan to Value is equal to or less than the original Effective Loan to Value (65% based on the above example). The borrower must be current on loan payments with no delinquencies in the last 12 months.

Assets are designated as Non-Volatile Assets which include checking, savings, and money-market accounts, CDs, or they are designated as Volatile Assets which include stocks, bonds, and mutual funds. The amount of the pledge is determined by the type of asset to be pledged. For Non-Volatile Assets, the pledge is 1:1 (if $100,000 is required, cash equivalent of $100,000 is pledged). If the asset to be pledged is a Volatile Asset, the ratio is 2:1 if $100,000 is required, $200,000 is pledged). If you’re in a higher tax bracket, these mortgages can save you money. By pledging the assets instead of liquidating them and using the cash for a downpayment — you can save yourself potential capital gains income tax.

Also this loan is an excellent option if the asset you are pledging has a higher expected rate of return than the interest rate on the mortgage. In short, Pledged Asset Mortgages allow borrowers to capitalize on their savings and investments without spending them.

WHO

Borrowers who have a large amount of liquid assets (stocks, mutual funds, etc) and need to show more income in order to qualify.

OVERVIEW

An Asset Depletion Mortgage is a method that an underwriter may use to show more income to qualify for a mortgage. An Asset Depletion Mortgage would be used when a borrower either has trouble documenting income or has too high of a debt-to-income (DTI) ratio and needs to show more income to qualify. The underwriter uses the borrower’s liquid assets to show that over a specified amount of time and at a certain interest rate, the liquid assets are capable of producing income for the borrower.

EXAMPLE

Borrower has $1,000,000 in liquid assets. Let’s say the current mortgage interest rate is 5% and it will be a 30 year loan.

The underwriter will calculate $1,000,000 at 5% over 30 years to show $9,250/month additional income under the “other income” category to help make up for lack of verifiable income or too high of DTI ration.

WHO

Non-U.S. citizen/Foreign National borrowers looking to purchase real estate in the U.S.

OVERVIEW

This mortgage is used to finance real estate being purchased in the U.S. from a borrower who is not a U.S. citizen. You may be a resident alien, temporary resident, or other classifications of non-U.S. citizen with either a temporary or permanent U.S. citizen status.

WHO

Any borrower looking to purchase a home that exceeds the Jumbo Loan limit.

OVERVIEW

In Orange county, the maximum loan amount for FHA is $625,500. While under Freddie Mac and Fannie Mae, the maximum loan amount is $625,500. When the loan amounts exceed these limits, you may need a Jumbo loan. If you’re planning to purchase a home with a loan amount that is higher than these maximums, you will need talk to one of our loan officers to see which option is right for you.

WHO

Borrowers looking to secure a mortgage with as little as 3.5% down payment.

OVERVIEW

An FHA loan is a mortgage loan that is insured by the Federal Housing Administration (FHA). Essentially, the federal government insures loans for FHA-approved lenders in order to reduce their risk of loss if a borrower defaults on their mortgage payments.

FHA loans are very popular – especially with first-time home buyers – due to the fact that just about anyone can qualify for this loan since there are no income limits. And buyers can enjoy a very small downpayment – as low as 3.5% of the loan amount. FHA loans also provide some added benefits if you’re lucky enough to have someone who is willing to gift you money for a downpayment. Plus you aren’t subject to a prepayment penalty which could be a big plus for subprime borrowers.

WHO

An existing FHA loan holder who wants to lower their monthly payment or mortgage interest rate.

OVERVIEW

FHA Streamline is a way to refinance your existing FHA mortgage. Since you already have an existing FHA loan, it’s referred to as a “Streamline” mortgage because of the small amount of documentation and underwriting the lender must perform.

WHO

Any borrower who wants to finance a property that is damaged or is in need of restoration.

OVERVIEW

If you have your heart set on a property that either has structural or interior damage or is in need of general restoration or updates, then an FHA Streamlined 203K may be the right loan for you.

This FHA program allows homebuyers to finance up to an additional $35,000 over the property price to use towards improving or upgrading their home before they move in. With this loan, you can quickly and easily tap into cash to pay for property repairs or improvements — even problems found by a home inspector or FHA appraiser.

Another great thing about this loan is that the down payment requirements are typically low and the eligibility requirements are generally loose.

WHO

Borrowers who are “upside down” in their mortgage and want to refinance without paying down principle or paying mortgage insurance.

OVERVIEW

HARP was created to assist buyers who owe more than their home is worth and need to refinance in order to lower their payment and interest rate. When you typically owe more than your home appraises for, you would either need to pay down the principle to where the you had at least 20% “down” on the property...or you would need to pay PMI (private mortgage insurance.)

A HARP loan allows you to borrow under an unlimited loan-to-value ratio. This means that no matter how far underwater you are with your home, you can refinance it with a HARP loan if it’s a fixed rate mortgage.

HARP also has loose income requirements. You can be unemployed without income and still qualify. Plus you can roll the closing costs into your HARP loan so that you have no out of pocket expenses.

WHO

Borrowers who are first-time home buyers or who have low to moderate income.

OVERVIEW

HomeReady® is a conventional, community lending mortgage that offers the underwriter certain flexibilities to qualified borrowers who meet specific income criteria or who are looking for properties that meet certain geographic location criteria.

WHO

Borrowers who are first-time home buyers or who have low to moderate income and need a low down payment.

OVERVIEW

The HomePossible® Mortgage can help more first-time homebuyers and borrowers who have low to moderate income, realize their dream of homeownership.

WHO

Borrowers who want to refinance, but may have not been able to do so due to declining property values.

OVERVIEW

The Freddie Mac Relief Refinance Mortgage who are making timely mortgage payments but have been unable to refinance due to declining property values. If you have been thinking about refinancing but due to declining property values, you need a mortgage with a loan-to-value (LTV) ratio greater than 80 percent, an Open Access loan might be a good option.

WHO

Servicemembers, Veterans, and eligible surviving spouses looking to buy, build, repair, or retain any property for their primary residence.

OVERVIEW

A VA Home Loan helps Servicemembers, Veterans, and eligible surviving spouses become homeowners. VA can help you buy, build, repair, retain, or adapt a home for your personal residence. VA Home Loans are provided by private lenders, with VA guaranteeing a portion of the loan, enabling the lender to provide you with more favorable terms.

WHO

Servicemembers, Veterans, and eligible surviving spouses looking lower the interest rate on their current VA home loan.

OVERVIEW

The VA Interest Rate Reduction Refinance Loan (IRRRL) lowers your interest rate by refinancing your existing VA home loan. By obtaining a lower interest rate, your monthly mortgage payment should decrease. You can also refinance an adjustable rate mortgage (ARM) into a fixed rate mortgage.

WHO

Borrowers with low-income who are looking to purchase homes in rural areas.

OVERVIEW

A USDA Rural Section 502 loan is used primarily to help low-income households purchase homes in rural areas. These loans can not only cover the purchase price of the property, but can be used to build, repair, renovate, or relocate a home as well. They can also be used to help you purchase or prepare sites – including the cost of adding water and sewage service to the property.

WHO

Borrowers planning to purchase a single family residence or condominium with a loan amount above $417,000 up to $625,500.

OVERVIEW

A Jumbo Conforming Loan is a mortgage in excess of $417,000. These mortgages fall under Fannie Mae and Freddie Mac guidelines and varies based on property location. Currently in Orange County, the maximum amount for a Jumbo Conforming Loan under Fannie Mae and Freddie Mac is $625,500.

Jumbo Conforming Loans are also allowed on 2-4 unit properties.$800,775 (2-unit), $967,950 (3-unit), $1,202,925 (4-unit).

WHO

Any borrower looking to avoid mortgage insurance, but who doesn’t have 20% for the down payment.

OVERVIEW

A Concurrent 2nd Mortgage is when a borrower obtains a 1st and a 2nd mortgage at the same time. A good example of this is an “80/10/10” loan. The 1st mortgage will be 80% of the value of the home, the 2nd will be 10% of the value, and 10% will be the down payment.

Typically, when you’re putting less than 20% down on a mortgage, you have to pay private mortgage insurance (PMI). So to avoid doing this, you might consider covering 10% of the purchase price with a Concurrent 2nd mortgage – while putting 10% cash down on the property. This 2nd mortgage – along with the 10% cash – would count as 20% down. This would save you the cost of PMI which can run anywhere from 0.3 percent to 1.15 percent of the purchase price per year.