Mortgage Programs

The conforming conventional fixed rate loan is the most popular loan for repeat home buyers, and is the loan most commonly talked about.  The maximum loan amount changes from year to year, but is currently $417,000 for single family homes. The loan limit is higher for multi-family dwellings.  These loans can be 10,15,20,25, 30 or even 40 years in length and conform to Fannie Mae(FNMA) or Freddie Mac(FHLMC) guidelines. These loans are also available as Adjustable Rate Mortgages (see below). You will want to consider a Conforming Conventional loan if you have 10% or more down payment, (or if the property you are buying is not workable for FHA financing, and you are not eligible for a VA loan), your credit scores are very good, and the payment you are seeking, when added to your current debt load, is very affordable (debt ratio).The minimum down payment for conventional loans these days is generally 5%, although this option is not available in all markets, or on all property types. 

Adjustable Rate Mortgages are loans on which the rate is fixed for a period of time and then the interest rate and payment adjusts. The interest rate may be fixed for the first 1, 2, 3, 5, 7, or 10 years. After that, during the adjustable period, the interest rate is generally re-set every 12 months, although these adjustments may occur more frequently. Once an ARM loan begins adjusting, the rate is usually computed by adding an "index" and a "margin". The most common index used is now the Libor Index. For example, if the Libor Index is at 6.0% and the margin on your loan is 2.25%, at the time of adjustment, your new rate would be 8.25% until your next adjustment period. All of these loans are capped as to how much the rates can increase from year to year as well as over the life of the loan. The advantage of an ARM loan is that they generally offer a lower initial interest rate. You will want to consider an ARM if you are planning shorter-term ownership (10 years or less), or if you believe interest rates will decrease.

A Jumbo loan is a loan that is greater than $417,000 and thus does not meet the standard guidelines of a conforming conventional loan. Rates on these loans may be higher than conventional loans and may have different down payment requirements. You may choose either a fixed rate of adjustable rate loan.

A FHA loan is a loan that is insured by the Federal Housing Administration. The maximum loan amount is $365,000 , for a single family property in the Twin Cities metropolitan area. Maximum loan amounts are based on the number of units and the county the property is located in. Minimum down payment is $3570.

A VA loan is a loan made available for qualified veterans and guaranteed by the Veterans Administration. A VA loan allows financing up to 100% and require the borrower to pay a one time funding fee. If you think you may be eligible for a VA loan, you can contact the Veterans administration to determine your eligibility.

In addition to being "eligible" for a VA loan, Veterans must "qualify", meaning they must meet standards regarding income, credit history, and assets. Contact us to determine qualifying.

FHA and VA will insure loans on 2, 3, and 4 unit properties, as well as single family homes, but the borrower must occupy the property they purchase.

A first time buyer is someone who has not owned a principal residence in the prior three years and there are a number of first time home buying programs available through State, City and County authorities. These programs offer the first time buyer a reduced interest rate for purchasing a home in a specific area. There are eligibility guidelines that a borrower must meet and limited funding from the participating municipalities. We are happy to discuss what programs might be available to you and where funds are available.

In addition to the programs outlined above, there are programs available to finance properties and borrowers that don't meet the conventional guidelines. These types of programs include the following;

• Investment Properties
• Multi-Unit Properties
• Super Jumbo Loans
  

Rates on our mortgage programs change on a daily basis. Please feel free to contact us for our current rates and for help in determining the right loan program for you.