Mortgage Loan Options

To see if you qualify for a mortgage loan contact your bank, credit union, or a local mortgage broker.  Based on your credit scores and history, debt to income ratio, length of employment and income, a mortgage lender will determine which mortgage loan options are the best fit for your home purchase.  Your mortgage lender is the expert in answering any questions you have about financing a loan.  When you know how much home you can afford to invest in, it makes shopping for your home a less stressful experience for you while it helps your Realtor to zero in on only those homes that are in your price range.  If you need assistance in finding a lender, contact me!

Conventional Loan:  This loan program offers the lowest rates and best closing cost terms.  It is a Fannie Mae/Freddie Mac loan for which you will need credit scores over 680 and be able to show you have 5% of your own funds earned and saved.  If you don’t have your own 5% towards down payment, you can ask a close relative to gift you the 20%  down payment.  If you have no gap in your full time employment of more than 6 months within the last year, the income you make on your job is allowable in qualifying for a conventional loan.

FHA Loan:  With a requirement of 3.5% down and a credit score in the low 600’s the Federal Housing Authority loan may be right for you.   The FHA allows all of your down payment money to be gifted to you by a close relative.  The income from your job is allowable in qualifying for this loan as long as you have no gap in employment of more than 6 months.

FHA mortgage insurance is similar to the private mortgage insurance (PMI) required for conventional mortgages with down payments below 20%, but there are some key differences.   Unlike the traditional PMI, the FHA MIP includes a 1.75% up-front fee at time of closing.   The fee is usually included in the loan, so you pay it over the life of the loan.  There is also  a 1.2% annual fee added to the loan which will be paid in monthly installments.

As of April 1, 2013 FHA will reverse a policy that automatically canceled required premium payments after loans reached 78 percent of their original value.  Many FHA borrowers will now have to continue paying annual premiums based on the unpaid principal balance for the life of the mortgage loan.

HomePath Ready Buyer Program:  As of April 15,2015 Fannie Mae offers First-Time Buyers help with closing costs with its new HomePath Ready Buyer program.   Typically closing costs range from 2.5% to 3% of a home’s price.  This program allows first-time buyers (any one who has not owned a home in the past three years) to take an online course, get certified, and become eligible for what could be significant savings for you.  As an example, on a $130,000 home, Fannie Mae could contribute up to $3,900 toward your closing costs.  The closing cost credit applies only to properties in Fannie Mae’s own inventory.  For more info go to  https://www.homepath.com/ready_buyer.html

South Carolina State Housing Loan:  This first time home buyer loan offers a competitive fixed interest rate mortgage and depending on your income, also offers down payment/closing cost assistance and is available through participating lenders.   The state defines “first time home buyer” as a borrower who has not owned a home in the last 3 years.  This requirement is waived for:

    • A single unmarried parent who is the custodial care giver of a child under the age of 18,  or has been separated from spouse for at least 6 months,  or has a recorded divorce decree/sparation agreement.
    • A borrower who is 100% permanently disabled as determined by SSDI, SSI, or is the custodial parent or legal guardian of at least one dependent (regardless of age) who is 100% permanently disabled or handicapped as determined by SSDI/SSI. (Appropriate Documentation Required)
The State also has the Palmetto Heroes Program for Law Enforcement Officers, Correctional Officers, Fire Fighters, EMS, Teachers, Nurses and CNAs, and Veterans, and SC National Guard (Active members; Army or Air.).  Borrower(s) must meet SC State Housing’s First-Time Home Buyer requirements.  3%, 30 yr fixed mortgage interest rate and up to $8000 down payment assistance ($5000 on an existing home/$8000 on a newly constructed home).

A new mortgage loan program was Nov 3, 2014 by  the South Carolina State Housing Finance & Development Authority which has been offering low fixed-rate mortgages and down payment assistance for over 40 years. These loan programs primarily have been FHA-insured loan programs which have helped many residents attain the dream of home ownership.

The new mortgage loan program for buyers being offered by the state housing authority is a conventional loan product which offers a fixed rate of 3.75% on FHA loans or a fixed 4.25% rate on a conventional loan, along with down payment assistance starting at $5000 on existing homes to $8000 on new construction homes.  The Private Mortgage Insurance is cancellable in a conventional loan when the balance of the loan reaches 80 percent of the original loan value and premiums are often much lower.

USDA Loan:  The USDA Rural Housing loan can only be used for homes located in federally designated rural areas.  Most of  Laurens, Anderson and Pickens counties are eligible areas for this loan as well as outlying parts of Spartanburg and Greenville counties.  This loan provides 100% financing with no down payment required, and a much lower PMI (Private Mortgage Insurance) premium than FHA.  As of Dec. 2014 the minimum credit score needed is 640.   You must meet the same job requirements as noted for FHA loan.  When searching for homes, your Realtor can advise you if a home is in a USDA designated area.

VA Loan:  This loan is available to eligible military veterans or their spouses and provides 100% financing, no monthly PMI and also allows for the seller to pay closing costs.  Active duty service people are also eligible for this loan.  If  you served in the military in any of the following capacities, you are entitled to apply for VA loan: 90 consecutive days on active duty during wartime; 181 consecutive days on active day during peacetime; 6 plus years of active duty in National Guard or Reserves.