Author: Ahmad Azizi, Branch Manager at Option Funding, Inc.

Ahmad worked as an underwriter for several years where he developed a passion for sales and quickly learned the ins and outs of the mortgage industry.

He has been a Loan Officer for over 20 years and the Top Producer at Option Funding for the past 10 years.

His commitment to his clients is unprecedented and he understands the importance of helping his borrowers achieve exceptional results in their home buying experience. In his spare time, Ahmad enjoys spending time with his wife and three children.

Categories
Mortgage Broker

How to Find a Good Mortgage Broker

how to find a good mortgage broker - option funding, inc.

If you are in the market for a new home or are interested in investing in any type of real estate, then there is a good chance you have already overwhelmed yourself with the loan application process. A process that, at times, can be tedious and somewhat confusing. 

 

So, what do you do? 

 

Maybe you have heard of a mortgage broker – or maybe not. Either way, this is your answer. A mortgage broker will help you to secure a loan that fits your situation and goals without having to put in the work.

 

As with anything, don’t just choose anyone. Here’s how to find a good mortgage broker so you get the best results. 

 

What is a Mortgage Broker? 

A mortgage broker is like a middleman between you and your future lender. They take on the role of looking at the different mortgage options and comparing them based on your needs. They handle all the applications, document collection, pulling of your credit history, and so forth. They will even negotiate terms for you. 

 

This is all done in a short time period – especially when compared to doing it yourself. 

 

A mortgage broker will take the time to get to know you and what your needs and hopes are for the new loan. For instance, knowing what your short-term and long-term goals are can help them determine the best route for securing the perfect loan. 

 

It is worth noting that a mortgage broker is licensed and regulated by the federal government. 

 

Benefits of Using a Mortgage Broker

If you are on the fence about using a mortgage broker, you may want to just go ahead and take the leap. Mortgage brokers have a lot to offer those who are looking to buy a new home or invest in property, including: 

 

Mortgage Options

When you work with a broker, you have options. They provide you with access to various types of loans through many different lenders. You are then able to find the loan that works for you – along with the best interest rate, too. 

 

Time-Saving

If you have ever filled out a loan application just to get denied, then you know how easily you can waste time in the home-buying process. With a mortgage broker, you fill out one form and can apply to multiple loans all at once. 

 

Find the Best Loan Offer

When you get your approvals, your mortgage broker will go ahead and compare them for you so that you can easily see all the important details of the loan offers and choose the one that benefits you most. 

 

Access to Expert Advice

A Mortgage Broker, such as Option Funding, Inc., can help identify which loan program is best suited for you and can also be a great source of information. They can answer any questions you may have, explaining to you what various terms mean, what closing costs are, etc. 

 

Tips for Finding a Good Mortgage Broker 

To find a good mortgage broker, you are going to want to do your due diligence. Remember, this is the individual that is going to help you to secure a large loan to purchase real estate. Therefore, you want it to be someone, such as Ahmad Azizi, who is going to take into consideration your current and future situations, your goals, your limitations, and so on. 

 

Ask Locally

If you are using a real estate agent, you can always ask for recommendations for mortgage brokers. Friends, family, colleagues, and neighbors are also great potential sources of information when it comes to finding a mortgage broker. Ask around and see if anyone has any referrals in mind – and be sure to ask about their experience, too. 

 

Do a Smart Online Search

Take some time to look online and see if you find a mortgage broker that meets your needs. Just be sure to do your research first. Be sure to confirm their licensing and check out their reviews, testimonials, etc. The more you search, the more information you will find, and will be able to make an informed decision. 

 

Meet With Potential Mortgage Brokers

It is always a good idea to meet with the mortgage broker before deciding to move forward. Keeping in mind the large role they are going to play in your home-buying process will convince you just how important this step is. 

 

Put together a list of questions, such as: 

  • How many lenders do you work with?
  • Do you think you can get me a loan like I am looking for? 
  • Have you ever worked with borrowers in my situation? 
  • How much do you charge? 

 

Choose Your Broker

Based on the answers you get and the comfort of the interaction, you can decide which mortgage broker you believe to be the best fit for you. 

 

Mortgage Options at Option Funding, Inc. 

If you have a dream of buying a new home, you are going to need a mortgage. At Option Funding, Inc, we are BOTH a Direct Lender and Mortgage Broker. Therefore, Ahmad Azizi can help identify the best lender for your situation. This gives him the ability to close 95% – 100% of deals that come his way because he can offer a multitude of loan and mortgage products. By working with Ahmad Azizi you’ll have access to multiple lenders. This can give you more flexibility, especially if your circumstances mean that you don’t fit into a category typically recognized by lenders. 

 

By the time you close on your new property, you will not only feel good about moving into the home you’ve always wanted, but you can feel good about your loan, too. 

To see what your options are, contact Ahmad today!

Categories
Mortgage

What is a Mortgage Note?

Whether commercial or residential, unless you are paying cash when you purchase a piece of property, you will likely take out a mortgage. This is a loan from your chosen lender that is secured by the real estate you are investing in. 

At your closing, the document you sign agreeing to these terms is referred to as the mortgage note. What is a mortgage note? Let’s take a closer look at what it is.

 

What is a Mortgage Note? 

Applying for a mortgage involves a lot of research – known as underwriting. This is when the lender will take a very close look at your financial situation, the amount of the loan you are seeking, the value of the real estate, and so forth. 

The bank is taking a risk when they agree to loan you money, so in order to protect themselves, they want to make sure that they are covered in case you don’t follow through with your end of the deal. For instance, if you do not make your monthly mortgage payments, they will use your new home as security so that, one way or another, they will get their money back for the loan they gave you. 

The mortgage note will provide all of the details of the mortgage, including how you will repay the loan – as well as what will happen if you don’t.

At your closing, this document will be presented to you. It will appear as a formal legal document, detailing everything we just discussed above. More specifically, you can expect to see: 

 

  • The full amount of the loan you are receiving.
  • The amount of down payment you have provided.
  • The details about your payments, whether monthly, bimonthly, etc. 
  • Information about the interest rate, whether fixed or adjustable, etc. 
  • If there are any penalties for prepayment

 

As the signing agent provides you with the document, he or she will likely state that it is the mortgage note. And, if not, you can always ask. Keep in mind, they will not be able to provide you with specific details or answer specific questions as that will need to go through your loan officer. However, they can let you know the title of the document. 

 

A Mortgage Note vs. A Mortgage Promissory Note

A mortgage note and a mortgage promissory note are not the same things. Though, they do go together when signing your loan documents. 

The promissory note provides more detailed financial information regarding the loan and its repayment – all the way down to the methods of payment. This legal document will also specify what will happen if you do not repay the loan according to its terms. 

 

The Importance of an Accurate Mortgage Note

As you can tell, these formal documents contain some very vital information pertaining to your loan agreement. Therefore, as you go through the closing, it is very important to make sure you understand what it is you are signing. 

By the time you reach the closing, you have hopefully already reviewed the details of the loan and discussed any questions or concerns with your loan officer. As you go through your signing, you simply want to make sure that the terms listed on the note are the same as what you discussed with the lender. 

Mistakes have been known to happen, as well as confusion between parties. Never sign a document if it doesn’t expressly state what it should – and never assume you can fix it later. It is true that questioning an incorrect document could delay your closing, but it is much safer to make sure that all documents are correct before you sign. 

Just as these documents you are signing are there to protect the lender, they protect you, too. 

 

Who Holds the Original Mortgage Note?

What happens to the original mortgage note after you sign at closing? Where does it go? 

Your lender will hold the original mortgage note until it is paid in full and satisfied. However, because it is a security instrument, it can be sold to another party. It is not uncommon for real estate investors to purchase these notes and receive income from them. Because the underwriter did all the work, they are essentially low-risk. 

It is important for you to know that it does not matter who holds the original mortgage note as you are still obligated to continue paying according to the terms listed on it. 

Once you pay the mortgage in full, the note is turned over to you. This satisfies that mortgage and will reflect that you are the owner of the property and the lender no longer has a vested interest. 

 

Defaulting on a Mortgage

We have discussed that the mortgage note and promissory note will address defaulting on the loan. And you know that your property is used as collateral to secure the loan. But what happens if you cannot make your monthly payments? 

Not paying according to the terms of the loan puts you into default. Unless otherwise stated, this will give the lender the opportunity to initiate the foreclosure process. Only the party holding the mortgage note can move forward with the foreclosure. 

 

Why Prepayment Matters

Your loan terms will state whether there is a penalty for prepayment. In most circumstances, prepayment is a good thing because the person who loaned the money gets their money back faster. However, in the mortgage world, prepayment means losing out on the interest. 

Just as it saves you money to pay early and avoid interest, it costs the bank money because they won’t get back as much as they expected. 

Before taking this step, carefully read through your documents to make sure that it makes sense to do so. 

 

Agreeing To Mortgage Terms

Now that you know about mortgage notes and what to expect, you are better prepared when you decide to invest in your new property. 

The first step is to get pre-approved for a mortgage with terms that you can feel good about. 

To give yourself the best opportunity, contact Ahmad Azizi at Option Funding, Inc. to discuss your mortgage options and, of course, get answers to any questions you may have along the way.

Categories
Homebuyer Mortgage

Can You Get a Mortgage Without a Job?

Here is the situation: You want to buy a home – but need a job. Is it possible? Can you find a lender willing to give you a home loan without supplying proof of steady income? Maybe you would like to refinance your current home but aren’t working – will you qualify? 

 

It is not at all uncommon for lenders to require a job to get a mortgage, asking potential buyers to submit pay stubs and tax information to reflect employment. But what happens if you try to get a mortgage without a job? 

 

You can exhale right about now. The answer is yes. You can still get a mortgage or move forward with a refi even if you aren’t employed. However, be prepared to meet a few lender requirements along the way. 

 

Buying a Home Without a Job

Confirming that a borrower has steady employment is always one of the boxes lenders check off when deciding whether to give you a mortgage. They want to ensure that when they agree to invest hundreds of thousands of dollars into your purchase, you can repay it over time. 

 

Without a job, how would you do that? 

 

Believe it or not, people always buy property without a job. Think about it – individuals who are retired, recently divorced, or even those sitting on investment accounts can buy a home with a new mortgage. 

 

The lender needs reassurance that you can meet monthly payments and will be able to repay the mortgage when it is due. This doesn’t have to come from a job. And, it doesn’t mean you have to be sitting on investments, either. 

 

Let’s look at a few ways to buy a home without a job. 

 

Have a Source of Income 

Just because you don’t have a job does not mean you don’t have a reliable source of income. Again, the lender wants to confirm you have a way to repay your mortgage. Whether that comes from waiting tables at a local restaurant or alimony payments does not matter. 

 

A few alternate sources of income that many lenders will consider instead of employment include investment income, retirement income (social security and/or pension payments), alimony payments, child support payments, rental property income, and so forth. 

 

Find a Cosigner

If you have someone with a steady income and good credit who would be willing to step up and co-sign your mortgage with you, you may qualify without a job. Co-signers are often parents, relatives, or loved ones who want to help.

 

It is important to note that this person will be financially responsible for your mortgage, ensuring it is repaid. Otherwise, if you cannot make your payments, they, too, will be held liable for the outstanding balance.

 

Housing Counselors May Help

As their name suggests, housing counselors are those who can help you uncover how you can get a mortgage – and be able to prove you can pay it back. They are trained and certified in helping individuals plan to make this investment. 

 

You can find housing counselors through the Department of Housing and Urban Development (HUD). 

 

Using Investments and Cash-on-Hand

If you have cash reserves that you are sitting on, you may not need to work to get a mortgage or refinance your property. This money may have come from some wise investments you have made over the years, or it could be due to an inheritance you received. 

 

Depending on the amount of the mortgage and the amount of money you have on hand, you may be able to get approved for a mortgage if the lender feels as though you have enough to make your monthly payments with ease. 

 

Available Home Loans with No Job

Although there are ways to secure a home loan without a job, you may also want to consider the different types of loans available for those who aren’t working. 

 

Non-Qualifying Mortgages

A mortgage that doesn’t require income verification is sometimes called a non-qualifying mortgage or NON-QM. This is a viable option for those seeking a home loan without a job – especially those who are self-employed or seasonal workers.

 

The downfall is that these loans often come with a higher interest rate than other options and additional requirements. But the approval rating is higher for those without a steady income source. 

 

An Asset Depletion Mortgage

If you have assets, you may be able to use them as leverage to get approved for an asset depletion mortgage. In other words, you would be relying on your assets to cover your mortgage rather than an income. 

 

The idea is not to take the assets to pay the mortgage but to show that you could do so if you wanted. Instead, you can pay your monthly loan however you want to – if it gets paid. 

 

Refinancing Without a Job

Just as you can get a new mortgage without a job, you can also refinance without one. There are two main options available that let you do so: 

 

 

The idea behind a refinance is to lower your interest rate and, ultimately, your monthly mortgage payment. These streamlined refinances are put in place to help you – and typically have very few qualifications you must meet. 

 

So, Can You Get a Mortgage Without a Job?

I, Ahmad Azizi at Option Funding, Inc., think it is possible. 

 

Having a job may be helpful when it comes to meeting the qualifications for a mortgage, but it is not a necessity. There are ways to get a mortgage without one. 

 

Just remember that the lender is taking a risk in giving you a loan. They want to have proof that you will be able to make your monthly payments. If you can provide it, then you may be well on your way to securing a mortgage. 

Still trying to figure out where to start? Contact me today to discuss your mortgage options.

Categories
Homebuyer Homebuying

Why Buying a House Without a Realtor Is a Bad Idea

Buying a house is one of the most significant financial decisions you will make in your lifetime. While it can be tempting to go it alone and purchase a home without the assistance of a real estate agent, doing so can come with significant risks and drawbacks. This blog post will explore why buying a house without a realtor is a bad idea. 

 

Why Do People Buy a House Without a Realtor?

While working with a real estate agent when buying a home is generally recommended, some people may purchase one without one. There are several reasons why someone might make this decision.

One reason people may buy a home without a realtor is the desire for more control over the process. When working with a real estate agent, the buyer may feel they have less say in important decisions, such as which properties to view or how much to offer. Buyers can have more direct input by purchasing a home without an agent.

Additionally, some buyers may simply prefer to handle things on their own. They may feel confident navigating the home-buying process and want to take on the challenge themselves. However, it is essential to note that buying a home without a realtor can be risky and may not be the best choice for everyone.

There are also rare instances when buyers must pay for the use of a real estate agent when purchasing a For Sale By Owner (FSBO) house. Contrary to popular belief, however, these instances are few and far between, as the seller almost always pays the real estate agent’s commission fee instead of the buyer. 

 

5 Times When it May Be an Advantage Buying a House Without a Realtor

Although most people rely on a buyer’s agent for a home purchase–about 88%, according to a 2020 survey by the National Association of Realtors (NAR)–here are five scenarios in which buying a house without an agent might be preferable.

1. You’re Related to the Seller

If you are selling a home within your family, you might be able to avoid hiring a real estate agent. In that case–as long as you have agreed on a price and other key details of the transaction–you likely could handle it without the seller paying several thousand dollars in commission. Consider consulting a lawyer to conduct a title search on the home and ensure all the paperwork is filled out, reviewed, and filed correctly.

2. You Know the Area

When buying a house in an area you’re intimately familiar with, you might not believe it’s worth hiring a buyer’s agent. However, there are more many services a real estate agent can provide than just “knowing the market,” such as helping you find the home and negotiating with the seller’s agent.

3. You Can Save Money

There are RARE cases in which a buyer might have to pay all or part of a buyer’s agent’s commission. For example, if it is a For Sale By Owner, they might clarify that they will not negotiate fees with a buyer’s agent. In this case, you might decide it’s worth working directly with the person selling the home instead of hiring an agent.

4. You Get to Work Alone

You might not trust dealing with a buyer’s agent, even though they are legally required to represent your interests. If you feel like an agent would push you toward a deal too quickly or set you up with the wrong home, you might feel more comfortable taking it on yourself.

You’ll want to be careful not to be overmatched when dealing with the seller’s agent, who only represents the seller’s interests. Think of it like negotiating a divorce settlement with just the counsel and expertise of the other party’s lawyer—it might not go well for you.

5. You’re Buying a New Home

If you are focused only on buying a newly built home, you likely could work out the arrangement directly with the builder. According to the NAR survey, about 6% of buyers worked with a builder or builder’s agent to purchase a home in 2020.

 

Disadvantages of Buying a House Without a Realtor

While there are some potential advantages to buying a House without a realtor, there are also several significant drawbacks. One of the biggest is the buyer’s lack of real estate expertise that an experienced real estate agent can provide. Agents have extensive knowledge of the local market, the home-buying process, and the legal and financial aspects of buying a home. Without an agent, the buyer may be disadvantaged when making informed decisions and avoiding potential risks.

Another potential disadvantage of buying a house without a realtor is the potential for legal and financial complications. Real estate transactions can be complex, with numerous forms, contracts, and legal requirements that must be met. Without an agent to guide them through the process, the buyer may risk making mistakes or overlooking important details that could lead to legal or financial issues.

Finally, buyers who choose not to work with a realtor may miss out on valuable connections and resources that agents can provide. For example, agents may have access to off-market properties or be able to connect buyers with local lenders, inspectors, and other professionals who can help facilitate the home-buying process. By not working with an agent, the buyer may be limiting their options and potentially missing out on valuable opportunities.

 

Will Buying a House Without a Realtor Save You Money?

One of the most common reasons people buy a house without a realtor is the belief that it will save them money. While it is true that working without an agent can eliminate some costs, it is essential to understand the full financial implications of this decision.

However, it is crucial to consider the potential costs of not working with an agent. Without an agent, the buyer may be less likely to negotiate a favorable purchase price, potentially resulting in a higher overall cost. Additionally, the buyer will still to pay for various services and inspections, such as a home inspection or title search.

Overall, whether buying a house without a realtor will save you money depends on several factors, including the purchase price of the home, the local market conditions, and the specific services required. It is essential to carefully weigh the potential costs and benefits before deciding. According to NAR, 86% of buyers recently purchased their homes through a real estate agent, and 10% purchased directly from the owner. 

 

If You Were to Move Forward in Buying a House Without a Realtor, Here’s What’s Involved

Buying a home without a realtor can be complex, but it is possible to do it successfully with the proper preparation and resources. Here are the general steps involved in buying a home without a realtor:

Determine Your Budget and Financing Options

Before you begin looking at properties, knowing how much you can afford and what financing options are available to you is essential.

Search for Properties

There are several ways to find homes for sale without a realtor, including online listings, local classifieds, and driving through neighborhoods.

View Properties

Once you have identified potential properties, you must arrange to view them in person. You may be able to contact the seller directly to schedule a viewing.

Make an Offer

If you are interested in a property, you must make an offer to the seller. This offer should include the purchase price, any contingencies or conditions, and a proposed timeline for completing the transaction.

Negotiate and Finalize the Sale

The seller may accept your offer, reject it, or counter with a different offer. If you reach an agreement, you must finalize the sale by completing any necessary paperwork, arranging for financing, and transferring the title.

Complete Necessary Inspections and Paperwork

It is highly recommended that you complete various inspections and paperwork to ensure the property is in good condition and that all legal requirements are met.

Close the Transaction

Finally, you must complete the transaction by paying the purchase price, transferring the title, and arranging any necessary funds or document transfers.

 

It is important to note that buying a house without a realtor can be challenging, and it may be in your best interest to seek the guidance of a real estate attorney or another professional.

 

Bottom Line

While buying a house without a realtor is possible, it is essential to consider the potential advantages and disadvantages of doing so. Some benefits of buying a house without a realtor include negotiating directly with the seller and moving more quickly through the process. However, there are also several potential drawbacks, including the lack of experience and resources that a real estate agent can provide.

Working with a real estate professional when buying a house is highly recommended. An experienced agent can provide valuable guidance and support throughout the process, helping you to avoid potential pitfalls and make informed decisions. By working with a real estate agent, you can also benefit from their extensive knowledge of the local market, connections with other professionals, and access to off-market properties.

Ultimately, deciding whether to buy a house with or without a realtor is personal and will depend on your circumstances and preferences. However, if you choose to work without an agent, being well-informed and prepared for potential risks and challenges is crucial.

 

Buying a House? Let Ahmad Azizi of Option Funding, Inc. Do Your Loan

If you are in the market to buy a house, consider working with me, Ahmad Azizi of Option Funding, Inc. As a local mortgage broker with years of experience in the industry, I’ve built strong relationships with many banks, which allows me to close even the most challenging home deals for my clients.

When you work with me, you can expect personalized guidance and support throughout the homebuying process. I will work with you to determine your budget and financing options and list potential properties that meet your needs and preferences.

One of the most significant benefits of working with me is my extensive knowledge of the local market and the mortgage process. I can provide valuable insight into your loan options.

If you have any questions, please contact me directly through Option Funding, Inc. – I’ll happily answer any questions and provide more information about my services and experience.

Categories
Homebuying Loan Officer

Using a VA Loan For a Second Home

Paper with words va loan on a wooden background.

VA loans are a valuable tool for many veterans and active-duty service members looking to buy a home. However, many people are unaware that VA loans can also be used for a second home purchase. In this blog post, we will explore the requirements for using a VA loan for a second home and answer frequently asked questions about this topic. If you’re a veteran or active-duty service member considering buying a second home, keep reading to learn more.

 

Questions we’ll address in this post:

  • Can you use a VA loan for a second home?
  • Can I use a VA loan to buy a vacation home?
  • Can I use a VA loan for an investment property?
  • How does the VA bonus entitlement work?
  • What is the difference between full vs. remaining entitlement?
  • What is an example of a bonus entitlement?
  • How can one best understand loan limits?
  • How many times can I use a VA loan?
  • How can I restore my eligibility after I sell my home?
  • What do I need to know if someone assumes my VA loan?

 

Now, let’s dive into the details and answer these questions individually.

 

Can You Use a VA Loan for a Second Home?

If you’re a veteran or active-duty service member looking to buy a second home, you may wonder if you can use a VA loan for a second home. The answer is yes, but there are some conditions you must meet:

 

To use a VA loan for a second home purchase, you must first satisfy your initial VA loan requirements, which means you must have served at least 90 consecutive days on active duty during wartime, or 181 days during peacetime, or served for at least six years in the National Guard or Reserves. You must also have a certificate of eligibility (COE) from the VA.

 

In addition to these requirements, you must meet other conditions to use a VA loan for a second home. The property must be in the United States and be used as a residence for at least a portion of the year. The VA does not specify that the property must be a primary residence, so it can be a vacation home or a rental property if you occupy it for some portion of the year.

 

Remember that the VA loan amount may be limited for a second home purchase, and you may need to make a down payment to cover the difference between the loan amount and the purchase price. However, a VA loan for a second home can still be an excellent option for many veterans and active-duty service members.

 

The following section will explore whether you can use a VA loan for vacation homes or investment properties.

 

VA Loans for Vacation Homes and Investment Properties

While VA loans are primarily intended for purchasing a primary residence, there are some circumstances in which they can be used to buy other types of properties, such as vacation homes or investment properties. However, there are some additional requirements and limitations to keep in mind.

 

To use a VA loan for a vacation home, the property must still meet the exact occupancy requirements as a second home. You must use the property for at least some portion of the year as a personal residence. The property must be in the United States and be a single-unit property.

 

Using a VA loan for an investment property is more complicated. The VA does not allow VA loans for purely investment purposes, meaning the property must be primarily used as a personal residence. Additionally, you can only use a VA loan to purchase a property with up to four units, and you cannot use a VA loan to purchase a property with more than one acre of land. If the property has more than one unit, you must occupy one of the units as your primary residence.

 

While using a VA loan for a vacation home or investment property can be an attractive option for some veterans and active-duty service members, there are some limitations and potential drawbacks to keep in mind. The loan amount may be limited, and you may need to make a down payment to cover the difference between the loan amount and the purchase price. Additionally, if you use the property as a rental, you will be subject to the VA’s rental income requirements.

 

In the next section, we’ll explore how the VA bonus entitlement works and how it can affect your ability to use a VA loan for a second home purchase.

 

Understanding VA Bonus Entitlement and Loan Limits

When you use a VA loan to purchase a home, you are given a certain amount of entitlement – the maximum amount the VA will guarantee on your loan. If you have used your VA loan entitlement before, you may still be able to use a VA loan for a second home purchase using your remaining entitlement or bonus entitlement.

 

The full entitlement is the amount of entitlement the VA guarantees for every eligible veteran. As of December 2022, eligible veterans, service members, and survivors with full entitlement no longer have limits on loans over $144,000, meaning no down payment is necessary. The VA will guarantee your lender that if you default on a loan over $144,000, the VA will guarantee up to 25% of the loan amount for a borrower with full entitlement. One qualifies for full entitlement if they meet at least one of the following requirements:

  • You’ve never used your home loan benefit, or
  • You’ve paid a previous VA loan in full and sold the property (in this case, you’d have your full entitlement restored), or
  • You’ve used your home loan benefit but had a foreclosure or compromise claim (also called a short sale) and repaid us in full.

 

You may have the remaining entitlement if you have used your VA loan entitlement before, meaning that you can use your remaining entitlement to purchase a second home as long as the total amount of the VA loan is within the remaining entitlement amount.

 

You may also have bonus entitlement, an additional entitlement that the VA provides to borrowers who meet specific requirements, such as purchasing a home in a high-cost area. Bonus entitlement can sometimes be used to purchase a second home, but the loan amount cannot exceed the bonus entitlement.

 

For example, let’s say you used your full entitlement to purchase your first home, which you later sold. You now have a remaining entitlement of $68,250. If you want to use a VA loan to purchase a second home for $300,000, you could use your remaining entitlement of $68,250 and your bonus entitlement of $89,062 to cover the guarantee on loan.

 

It’s important to note that VA loan limits vary by location and are based on the conforming loan limit set by Fannie Mae and Freddie Mac. In most areas, the VA loan limit for 2023 is $726,200. However, in high-cost areas, the loan limit can be much higher.

 

If you use a VA loan to purchase a second home, the loan amount may be limited by the remaining entitlement, the bonus entitlement, or the loan limit for your area. Sometimes, you may need to make a down payment to cover the difference between the loan amount and the purchase price.

In the next section, we’ll explore how many times you can use a VA loan and how to restore your eligibility after selling your home.

 

Using VA Loans Multiple Times and Restoring Eligibility

If you’re a veteran or active-duty service member, you may wonder how many times you can use a VA loan to purchase a home. You can use a VA loan as often as you want if you meet the eligibility requirements and have remaining entitlement.

 

To restore your eligibility for a VA loan after selling your home or paying off a VA loan, you must apply for restoration of entitlement. To do this, you will need to submit a completed VA Form 26-1880, along with proof of the sale of your home or the payoff of your VA loan. You will also need to provide proof of your current military status, such as a statement of service or discharge papers.

 

Restoring eligibility can take some time, so starting the process early is essential if you intend to use a VA loan for a second home purchase. Additionally, keep in mind that you will need to satisfy the exact requirements as you did for your initial VA loan, including having served the minimum length of time and obtaining a certificate of eligibility.

 

It’s important to note that if you default on a VA loan, you may lose your entitlement and be unable to restore it. Additionally, if you have a VA loan in default, you may only be able to use your remaining entitlement for a second home purchase once the default is resolved.

 

What to Know if Someone Assumes Your VA Loan

If you have a VA loan and you’re considering selling your home, you may have the option to allow the buyer to assume your VA loan. Here’s what you need to know about VA loan assumptions:

 

A loan assumption is when a buyer takes over the payments on an existing mortgage instead of obtaining a new mortgage to purchase the property. In the case of a VA loan, the buyer must also be a veteran or active-duty service member and meet specific eligibility requirements.

 

To qualify for a VA loan assumption, the buyer must have a good credit score and sufficient income to make the payments on the loan. The buyer must also obtain a certificate of eligibility from the VA and meet other underwriting requirements.

 

One advantage of a VA loan assumption is that it can save the buyer money on closing costs and may provide a lower interest rate than a new mortgage. However, the buyer will be assuming the remaining term and balance of the original loan, which may only be ideal if the buyer plans to keep the property for a short time. Additionally, the seller will still be liable for the loan if the buyer defaults.

 

Before agreeing to a loan assumption, it’s essential to consider the pros and cons carefully and to work with a qualified mortgage professional who can help you make an informed decision.

 

Apply for a VA Loan Today at Option Funding Inc.

In this blog post, we’ve explored the use of VA loans for second homes, vacation homes, and investment properties and the requirements and limitations of each. We’ve also discussed how the VA bonus entitlement and loan limits work, how to restore eligibility for a VA loan, and what to consider if someone assumes your VA loan.

If you’re a veteran or active-duty service member considering purchasing a second home, a VA loan can be a valuable tool to help you achieve your goals. Contact me, Ahmad Azizi of Option Funding Inc., if you have any further questions or are ready to apply for a VA loan for a second home purchase.

Categories
Homebuying Mortgage

Co-Signing a Mortgage for Your Child: What You Need to Know

As a parent, one of the most rewarding experiences is helping your child achieve their goals, especially when it comes to buying their first home. However, the process of buying a home can be daunting, especially for first-time buyers. As a parent, you can play a crucial role in helping your child buy a home by co-signing a mortgage for your child, navigating them through the home buying process, and making informed decisions.

 

Co-Signing a Mortgage for Your Child? Consider this:

As a parent, you may be considering the idea of co-signing a mortgage for your child. This can be a great way to help them achieve the milestone of homeownership and provide them with a stable place to live. However, it is important to carefully consider the financial and legal implications of buying a home for your child before deciding.

Financially, helping your child buy a home may seem like a good investment. However, it’s important to keep in mind that owning a home comes with ongoing expenses such as mortgage payments, property taxes, and maintenance costs. Additionally, if your child is not able to make these payments, the financial burden may fall on you.

From a legal standpoint, co signing a mortgage for your child can have implications for estate planning and taxes. If you plan to transfer ownership of the home to your child in the future, it’s important to consult with a lawyer to understand the tax implications and ensure that it aligns with your overall estate plan.

On the other hand, if you are financially stable and willing to take on the responsibilities, helping your child buy a home can be an excellent way to provide for them and support their dream of homeownership. However, it’s important to have clear communication and agreement on the terms, such as who is responsible for the payments, who will live in the house, and when the ownership will be transferred.

It’s important to consider both the pros and cons before deciding about buying a home for your child, and to seek the advice of financial and legal professionals. With proper planning and guidance, co signing a mortgage for your child can be a positive step towards achieving their goal of homeownership and to secure their future.

 

Pros

  • Can be a good investment for the future, as property values tend to appreciate over time
  • Can help your child establish credit and build wealth
  • Can provide financial assistance and support for your child, especially if they are just starting out in their career or are facing financial difficulties
  • Can be a way to help your child achieve the milestone of homeownership at a young age
  • Provides them with a stable and permanent place to live
  • Can be a way to keep your child close to family and loved ones
  • Can be a way to diversify your portfolio and invest in a tangible asset
  • Can be a way to provide a sense of security for your child, as homeownership is a sign of stability and permanence

 

Cons

  • It may create expectation of financial support in future, or create resentment if the child does not have the means to support the home
  • Legal and tax implications may arise, especially when transferring ownership of the property to your child
  • Ongoing expenses such as mortgage payments, property taxes, and maintenance costs
  • The process can be complex and may require legal and financial expertise
  • It may create a sense of dependency for the child, and not allow them to learn the responsibilities of homeownership.

 

Considerations for Parents Before Helping Your Child Buy a Home

When helping your child buy a home, there are several factors that parents should consider before deciding.

Financial Readiness

It’s important to determine if your child is financially ready to take on the responsibility of a mortgage. This includes having a stable income, a good credit score, and enough savings for a down payment and closing costs.

 

Relationship Dynamics

Buying a home together can have a significant impact on your relationship with your child. It’s important to discuss expectations, responsibilities, and plans for the future before making a decision.

 

Legal and Tax Implications

There may be legal and tax implications when transferring ownership of the property to your child. It’s important to consult with a lawyer and a tax professional to understand the implications and to ensure that the process is handled correctly.

 

Future Plans

It’s important to consider your child’s future and how the home may fit into those plans. For example, if your child plans to move away soon, buying a home may not be the best option.

 

Emotional Readiness

It’s important to consider if your child is emotionally ready to take on the responsibilities of homeownership, and to ensure they understand the responsibilities that come with owning a home

 

Support

It’s important to understand the extent of your support, and to ensure that your child understands that homeownership comes with responsibilities and costs, and that you can’t be expected to pay for everything all the time.

 

Ultimately, helping your child buy a home can be a great way to provide them with a stable and permanent place to live, and to help them achieve the milestone of homeownership at a young age. 

 

5 Home Buying Assistance Options

When helping your child buy a home, there are several options parents should consider to assist their child in the home buying process.

Co-signing on a Mortgage

This option allows parents to co-sign on the mortgage and assist with the down payment, but the child is still responsible for the monthly mortgage payments.

 

Providing a Gift or Loan for a Down Payment

This option allows parents to provide financial assistance for the down payment, but the child is still responsible for the monthly mortgage payments.

 

Rent-to-Own Agreement

This option allows the child to rent the home for a certain period, with the option to purchase the home at the end of the rental period. This can be a good option for those who need time to improve their credit score or save for a down payment.

 

Buying the Home and Renting it to the Child

This option allows the parents to purchase the home and rent it to the child. This can be a good option for parents who want to provide a stable place for their child to live but don’t want them to take on the full responsibility of homeownership.

 

Co-Investing

This option allows parents and the child to jointly invest in the property, with both parties sharing the responsibilities and benefits of owning the home.

 

Consider Helping Your Child Buy a Home with Ahmad Azizi of Option Funding

Helping your child buy a home can be a rewarding experience for both parents and children. However, it’s important to consider the financial and emotional implications before deciding. As a parent, it can be helpful to explore different assistance options such as co-signing on a mortgage, providing a gift or loan for a down payment, rent-to-own agreement, buying the home and renting it to the child or co-investing. It’s also important to seek the advice of financial and legal professionals before deciding.

At Option Funding Inc, we understand that buying a home is a big decision and we are here to help parents navigate the process. I, Ahmad Azizi, can help you understand the different options available and guide you through the process of buying a home with your child. From finding the right property to securing the best financing options, we have the expertise and resources to make the process as smooth and stress-free as possible. Contact us today to learn more about how we can help you and your child achieve the dream of homeownership!

Categories
Homebuying Mortgage

Shopping for Mortgages in the New Year

The housing market changes so quickly, from one season to the next. For the majority of last year, most communities around the country found that sellers had the upper hand in real estate transactions. Multiple homebuyers were trying to buy up property – increasing offers and making concessions at every turn. Some even went way above the asking price (and market value) just to have a chance to purchase their future home.

Today, the tides are turning ever so slowly. More and more buyers are finding that they have a bit more control – or at least have a more level playing field – as they move forward with finding the house of their dreams. Of course, before they can proceed to make an offer, they need to be pre-approved for a mortgage.

So, what is it like shopping for mortgages in the new year? Let’s take a look at the current trends and the different options available.

Current Trends for the New Year

Believe it or not, shopping for mortgages in January is a fantastic time for buying a new home. It comes with competitive pricing and discounted rates when compared to other seasons – especially summer and fall.

Why is this? Well, there is no definitive answer. The reason likely has to do with the fact that the competition is nowhere near as fierce in the winter months as it is during the warmer months.

Does that mean you should only apply for one mortgage? Does that mean you should just grab the first mortgage that you get approved for? Not at all. Just because the volume of buyers is down doesn’t mean that the offers from mortgage companies aren’t still competing for your business.

Although interest rates may fluctuate for 2023, January is proving to be a very good time to invest in a mortgage as we move through the year. Most tend to agree on the fact that continued inflation, the looming idea of a possible recession, and high-interest rates are all going to make an impact on homebuyers.

Different Types of Mortgages

If you are interested in buying a new home this year, now is the time to get shopping for mortgages. And understanding the different types of home loans available can help you to secure something that is a great fit for your needs.

  • Fixed-Rate Mortgages: Fixed-rate mortgages are the most well-known type of loan. You pay a monthly payment that includes principal and interest – and it never changes throughout the loan’s term. You can often find these for terms ranging from 10 years to 30 years.
  • Adjustable Rate Mortgages (ARM): ARM loans have an interest rate that varies throughout the term of the loan. It may or may not start out as fixed, but then it will fluctuate due to market conditions.
  • Interest-Only Mortgages: Mortgages that are interest-only focus on repaying the interest first for a specific amount of time before moving on to paying toward the principal. While this can start you off with small payments, the downside is that the longer you pay interest only, the bigger your monthly payments will be in the future.
  • Graduated Payment Mortgages: With this type of mortgage, graduated payments increase each year for a certain number of years before becoming fixed. This is commonly used for buyers looking to qualify for a loan when the interest rates are high.
  • Government-Backed Loans: Government-backed loans, such as FHA home loans and VA loans, all help you to get the mortgage you are looking for, but often with less-strict requirements.
  • FHA home loans: Backed by the Federal Housing Administration and allow more people to become homeowners. They often have low mortgage rates and require a minimum down payment.
  • VA loans: For military veterans, giving them low-interest rates, reduced closing costs, no down payment, and more. These are great perks for veterans and their families to take advantage of.
  • Jumbo Loans: Lenders of conventional mortgages will not often finance properties that are too high. For those looking to purchase a new home that exceeds the maximum amount, jumbo loans are often the best choice. Depending on the lender you choose, you could find a loan that is fixed rate or adjustable.

Tips For Securing a Great Mortgage

  • Boost your credit score. You will find that it is possible to get a mortgage even when you have a credit score below 650. But, if you could take steps to boost your credit by even 100 points to between 700 -749, you will see tremendous savings on your mortgage rate.
  • Choose the right size mortgage. As of 2023, the Federal Housing Finance Agency (FHFA) announced new conforming loan limits, raising them by 12% (an increase of $79,000 from 2022). This change could lead to savings for borrowers!
    • Any mortgage under $726,000 in most areas will get you a lower rate. However, in high-cost areas such as Los Angeles, Orange, and Alameda, rates are higher at $1,089,300. Elsewhere, you’ll find rates for Ventura county at $948,750, San Diego county at $977,500, and Riverside county at $726,200.
    • Keep in mind each loan comes with the costs of loan origination, regardless of the size of the loan. The larger the loan, the greater the return. So, to cover the costs, it is common to find rates a bit higher for lower loans.
  • Decrease your LTV and DTI. People spend a lot of time focused on their debt-to-income ratio (DTI). And while it is important, decreasing your loan-to-value (LTV) rate will often help both. Get the best rate when you can keep your LTV below 80% and a DTI below 30%.

The Wrap Up

If buying a new home is on your 2023 bucket list, then you may not want to delay. As we mentioned, the competition is lower during the winter months. And, with predictions of fluctuating interest rates as we make our way through the year, you may not get a better opportunity than you have right now.

Shop for Mortgages at Option Funding, Inc.

Make shopping for mortgages easy.

Visit Ahmad Azizi at Option Funding, Inc. in Westlake Village to find the best home loan and mortgage options today!

Categories
Homebuyer Homebuying Mortgage Unconventional Mortgage

Bad Credit, Lower Income? Try an Unconventional Mortgage

It’s so easy to get discouraged about buying a new home when you have bad credit or not enough income. You see other people buying houses all the time and wonder “how do they do it?” Do not fall into the trap of thinking that everyone has a perfect credit score or a well-paying job, because that is simply not the case.

Those with less-than-ideal circumstances for a conventional loan should know that there are other options available, such as an unconventional mortgage. It all comes down to knowing where to turn and who to turn to. This can mean the difference between being a homeowner or not.

Ready to get your dream home in the new year? Option Funding, Inc. can help make it a reality with an unconventional mortgage.

What is an Unconventional Mortgage?

Conventional loans are the most well-known type of home mortgage for homebuyers. These loans come with requirements that must be met to be approved, such as having the proper credit score, enough money for a down payment, and proof of steady employment.

These loans can either be a fixed rate, meaning they won’t change over time, or an adjustable rate, which means they come with an interest rate that changes at predetermined times, such as once a year. The rate can go up or down depending on economic factors. There are not many other options for these types of mortgages which is what makes it tough for everyone to buy a home.

Unconventional mortgages are different. These loans potentially allow people to purchase a new home due to their less stringent approval requirements. Those with lower credit scores and less income may be able to obtain an unconventional mortgage. It is important to keep in mind that some of these loans may require a larger down payment.

Types of Unconventional Mortgages

Unconventional mortgages are backed by government programs, including FHA, USDA, and VA loans. Let’s take a closer look.

FHA loans are those secured by the Federal Housing Administration. This is, by far, the most used unconventional loan and has a lower credit score and down payment requirement than most conventional loans. It is a mortgage that is insured by the FHA and issued by a bank or other approved lender.

USDA loans are secured by the U.S. Department of Agriculture. These are used to help build rural areas. There are a few restrictions when it comes to credit score, the size of the town, and it must be the primary residence of the borrower.

VA loans allow active-duty service members, veterans, and eligible surviving spouses to finance a home with no down payment, no mortgage insurance and lenient credit requirements. They are backed by the U.S. Department of Veterans Affairs.

While these may be the most popular types of unconventional mortgages, they aren’t the only options. Non-QM, stated income loans, private money mortgages, hard money lenders, and seller financing all fall into the category of unconventional mortgages.

Some Advantages of an Unconventional Mortgage:

Less stringent requirements. Not everyone fits the mold for a traditional mortgage. So having options means that everyone gets a chance at owning a home, including those who have been rejected for a conventional loan. This includes those who are self-employed, someone that may have an unstable employment history or doesn’t have a lot of savings, those with bad credit, have previously filed for bankruptcy, and so on.

Greater equity upfront. Another thing that sets unconventional mortgages apart is the fact that depending on the type of loan, they may require you to have a larger down payment. And while this may seem like a disadvantage, it really isn’t. By doing this, you are lowering your monthly mortgage payment and creating equity in your home before you even move in.

Greater flexibility. There is not much flexibility to be had when it comes to traditional mortgages, aside from choosing whether you want a 15 or a 30-year fixed-rate term loan. With an unconventional loan, you have more choices, such as a balloon loan or an adjustable-rate mortgage.

Unconventional Loans at Option Funding, Inc.

Don’t give up on your hope of becoming a homeowner without first discussing your options with Option Funding, Inc. As our name suggests, we have the options you are looking for to qualify for financing and get the loan you need to finally make your move. We have been helping future homeowners just like you for over 20 years.

There are many flexible options that will fit into your personal financial goals, including VA loans, FHA loans, NON-QM loans, jumbo loans, interest-only loans, bank statement loans, and more.

Falling on hard times, having bad credit, or having a lower income should not keep you from being able to put down roots in a community you love. All you need is the right team of loan advisors to help guide you along the way.

Questions? Contact Ahmad Azizi at Option Funding, Inc. in Westlake Village to secure a mortgage option just for you.

Categories
Homebuyer Homebuying

6 Pros of Buying a Home During the Holidays

Shopping is a huge deal during the holidays. The stores are bustling with shoppers looking for the latest gadgets, the hottest outfits, and the best toys a kid could ever wish for. Holiday tunes are pouring out of the speakers amidst the sounds of the cash registers constantly chiming with sales.

While it may be a great time for retailers, what about homebuyers? Is a house on your shopping list for the holidays?

Believe it or not, taking out a mortgage and buying a home during the holidays is often a great idea – and here are 6 reasons why.

1. Fewer Buyers in the Market

Remember, during the holidays, people are busy shopping with their friends and family trying to gather the perfect gifts. The last thing on their mind is the housing market.

Because of this, the market tends to slow down over the holiday season. So, if you are a buyer, you may have less competition with fewer offers being made – and it could boost your chance of landing your future dream house.

2. Motivated Sellers

Just as everyone is out enjoying the holidays, sellers who aren’t too motivated will likely wait until after the holiday season to list their property. That way they can enjoy the holidays without having to deal with the stress of staging their home and going through the entire real estate transaction process in a season that is already busy.

In other words, if you see an active listing during the holidays, you can feel confident that the seller is most likely motivated to sell. They may be willing to negotiate with you when it comes to things like the sales price and/or the closing costs.

Keep in mind that many homes are staged when they are trying to sell. And during the holidays, the staging really tries to pull at your emotions as it is the season for warm feelings. Don’t get lost in the emotion and make a poor decision. Be objective.

3. Lower Home Prices

For those who do the research, December seems to always be the month with the lowest home prices. As mentioned above, this probably has to do with the combination of fewer people looking to buy homes and sellers who are eager to sell.

The good news is that because the home prices are lower, you can usually find yourself with more home than you initially thought you could get for the price of your loan.

This can be one of the biggest reasons buyers choose this time of year to buy their new home.

4. Potential Tax Benefits

Have you ever wondered why companies give their donations and make big purchases right at the end of the year? It is all about the tax benefits.

Buying a home will give you some huge tax advantages. If you buy the home this year, then you get to experience the perks going into the new year when you file your taxes. On the other hand, if you wait until January to finalize your purchase, you will have to wait until the following year to reap the tax benefits.

For those who are out there searching for properties while everyone else is looking for gifts, there is always a big push to have that closing by December 31st – all for the tax benefits.

5. Quicker Loan Approval

During the spring and summer months, mortgage lenders are often overloaded with applications and the process to get approved can be very slow. However, during the winter holiday months, applications slow down which can be great news for you. Mortgage lenders can pump out quick loan approvals during this slow season which can really help you get your search started quickly.

It is worth mentioning, too, that since the volume is lower, the level of customer service is often higher. And who doesn’t love a great customer service experience?

6. An Overall Better Home-Buying Experience

When buying a home during the holidays, you open yourself up for a great experience. You don’t have to fight with others trying to get in to see a place for sale, nor do you have to battle competition when putting in an offer.

It is the holidays, and everyone in this industry is a little happier, and a lot less stressed. So, you can enjoy everything that comes with home buying without all the hassle. And that makes this a great time to buy.

Besides – what better way to kick off the new year than in your new home?

Tips for Buying a Home During the Holidays

It may be a great time of year to buy a home, but there are a few things you can do to ensure that everything goes as smoothly as you envision. Check out these tips:

  • Always get pre-approved for your loan. Don’t hold off just because the market doesn’t seem busy.
  • Find a great realtor. Having an expert on your side with your best interest in mind can be a game-changer.
  • Know that some sellers can be pushy. Remember, sellers this time of year are motivated so they may come off a bit aggressive so be prepared.
  • Again, don’t get caught up in the emotions. Someone who has a well-staged home may be able to entice buyers purely on their feelings. Tread lightly or you may regret it later.
  • Don’t be afraid to negotiate. Many buyers are afraid to negotiate in case the seller decides to go with someone else. Don’t be afraid. Let your realtor be the messenger.

Buying a home anytime is exciting (albeit stressful) even more so during the holiday season. Take advantage of all the potential benefits: such as less competition, motivated sellers, potential tax benefits, and quicker loan approval.

You may just find great satisfaction in the overall experience as you move into your new home in the new year.

Categories
Homebuying

Different Types of Mortgages Explained

Before you get too deep in your search for a new home, you will want to secure your financing. You may know a thing or two about traditional mortgages, but did you know that they are not your only option and that different types of mortgages are available?

What are the Different Types of Mortgages?

Before applying for a mortgage and making a final decision, you will want to consider and research all mortgage options. And taking a closer look at things like your credit score, your income, the type of home you’d like to buy, etc., will help you narrow down the best type for you.

First things first, though – know your options. So, let’s talk about some of the different types of mortgages available.

Conventional Loans

Conventional loans are those that come from a bank or other type of private lender. They often require a specific level of stable income, credit score, and down payment. These loans can vary greatly in their amounts, but a conforming loan is meant to be sold to government-supported companies like Fannie Mae or Freddie Mac and has a general cap of around $647,200 as of 2022. The majority of homebuyers use this type of loan.

These loans tend to cost less than other types of loans and have a fairly simple application process, too. The downfall is that not everyone will qualify for them.

FHA Loans

FHA loans are loans that are offered by private lenders and insured by the Federal Housing Administration (hence their name). The eligibility criteria for these loans tend to make it much easier for more people to qualify for a loan. For instance, those with lower credit scores may find that this is a great fit – though it is important to keep in mind that the down payment may also vary depending on the credit score.

For individuals who may not qualify for a conventional loan, an FHA loan may be the next best thing.

VA Loans

VA loans are reserved for veterans or those who are actively serving in the U.S. military. These loans are backed by the U.S. Department of Veterans Affairs and are designed to help veterans buy homes. You must have been in the military for a certain length of time to qualify.

VA loans come from a private lender, but they are guaranteed, in part, by the government. As a result, it makes it easier to get access to better interest rates and loan terms, even with not-so-great credit. Plus, there is no down payment required.

USDA Loans

The U.S. Department of Agriculture provides loans to low-income and middle-income families looking to buy homes in rural areas. Depending on which route you choose, the USDA loan could be your direct lender or guarantee loans made by private lenders. These are often fixed-rate loans without the need for a down payment.

There are a few criteria that must be met in order to qualify for these types of loans, such as living in an area with a population of less than 35,000, being unable to afford conventional loans, and having an income that doesn’t surpass a certain % of the median income for the area.

Due to the nature of these loans, you will have to prove that you are able to pay them back.

Jumbo Loans

Individuals who are purchasing a home that is quite costly may not be able to just get by with a conventional loan since there is a cap on conforming loans. Instead, non-conforming jumbo loans go up into the millions and are often the best option for those seeking out these high-priced homes.

Due to the risk involved with the large sum of money, this type of loan often requires a significant down payment, and the costs you may incur throughout the process may be higher than you’d expect with a conventional loan.

Know This Before Choosing Your Home Loan

While deciding between the different types of mortgages, there are a few things you may encounter that you will want to consider. For instance, what is the difference between a variable and a fixed loan? How long should you take out a loan? What happens if you are buying a new construction home? 

Interest Rates

In a nutshell, fixed-rate loans offer a fixed interest rate that never changes throughout the life of the loan. Variable-rate loans – also referred to as adjustable-rate mortgages – have a fluctuating interest rate that can increase or decrease based on market conditions.

It is not uncommon for some loans to start out with a fixed interest rate and then switch to an adjustable rate after a number of years. These loans can be risky as you never know what the future holds, but their appeal is the low-interest rate at the beginning. When deciding between the two, don’t hesitate to consider your long–term plans.

Term Length

You will encounter the fact that all loan terms are not the same. The most commonly available loan terms are 15-year, 20-year, and 30-year. The length you choose will depend on many different factors, but know that the shorter the term length, the more you save in interest.

New Construction

If you are buying a new home that has not been built yet, short-term construction loans are available to fund the building. Often these loans can be converted to a regular mortgage once the construction phase is complete.

Choosing the Right Mortgage

Buying a home is one of the biggest investments you will make in a lifetime. So, as you head out on your quest to find the perfect home, know that the perfect mortgage is out there for you, too. Don’t just go with what you know, but take the time to learn about your options so that you can choose one that is the best fit.

Whether a conventional loan, an FHA loan, a USDA loan, a VA loan, a jumbo loan or something else, there are loans you may benefit from – regardless of where you want to purchase your home or what your financial situation is like.

For more information about the different types of mortgages, contact Ahmad Azizi at Option Funding, Inc. – your local mortgage lender in Westlake Village, California.

 

Disclaimer: Please be advised that these are just some of the mortgage options available and not an extensive list. At Option Funding, Inc., we offer a range of home loans, including bank statement loans, hard money loans, non-qm loans, refinance loans, reverse mortgages, zero down loans, and unconventional loans.

Give us a call today for more information.
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