Conventional Loan vs FHA Loan vs VA Loan vs USDA Home Loans

compare home loan options

When shopping for a mortgage it is a good idea to compare loan options. Many lenders offer a variety of home loans that might fit your needs. Each mortgage options has it benefits and weaknesses that should be considered for your individual loan needs.

Lending guidelines are not the same for all mortgage lenders.  All banks and mortgage companies operate off the same set of guidelines for the specific mortgage programs however each may have its own overlays. Lending overlays are additional conditions or interpretations of the set guidelines.  For example, FHA loans with a 3.5% down payment allows as low as a 580 credit score but most banks and lenders add an overlay that requires a 640+ credit score.

The best way to review mortgage options is to speak with a licensed loan officer that will be an expert on the loan options. They will help to review the pros and cons and assist with comparing home loans that may be the best for you.

The chart below compares Conventional Loans vs FHA loans vs VA loans vs USDA Rural Development Loans.  These are the most popular loan options that most borrowers will review. As you can see below, if you have had a recent bankruptcy or foreclosure then Conventional would not be an option.

If none of these options seem to fit your life situation then a portfolio loan may be your last resort. Portfolio mortgages are home loans that do not fit the agency guidelines. They take a more common sense approach and make exceptions on loan requirements if the borrower is has financial strength in other areas. The trade off is that they typically require larger down payments and have higher rates than other loan programs.

Home Loan Comparison Chart

April 11th, 2018:Conventional LoansFHA LoansVA LoansUSDA Loans
Minimum Required Down Payment3% of Purchase Price3.50% of Purchase Price
(Only 1.5% required for our FHA Down Payment Assistance Program)
Zero DownZero Down
Annual Mortgage Insurance Rates (Paid Monthly)Private Mortgage Insurance (PMI)  ranges from .10 to 1.5% of the loan amount annually based on Residency Status, Credit and Loan to Value.Mortgage Insurance Premiums (MIP) ranges from .80% to .85 % for loan terms over 15 years and .45% to .95% for loan terms of 15 years or less.NONE.5% of loan amount
Additional CostsIncrease to rate or loan fees based on credit score1.75% Upfront Mortgage Insurance Premium added to your loan balance or paid in full at closing.0% fee if Disabled Veteran or surviving spouse
2.15% for First VA Loan Standard Military
2.40% for First VA Loan National Guard or Reserves
3.3% Subsequent Loans
2.00% Funding Fee added to your loan balance.
Minimum Credit Score620+ credit score530+ with 90% loan to value and 580+ for 96.5% loan to value550+ credit score580+ (Additional requirements including proof of Rental History under 620 score)
Maximum Loan Amount$453,100 Loan Limit
(Read More)
$294,515 Loan Limits for Single Family Homes
$377,075 for Two Units
$455,800 for Three Units
$566,425 for Four Units
$453,100 Loan Limit$453,100 Loan Limit
Allowable Seller Contributions

Principal Residence & Second Homes
LTV Greater than 90% = 3%
LTV 75.01-90% = 6%
LTV 75% or less = 9%

Investment Properties
ALL LTV ratios = 2%

6% Seller Contributions payable towards Buyer Closing Costs and Pre-Paid items.4% Seller Contributions payable towards Buyer Closing Costs and Pre-Paid items.USDA sets no maximum however most lenders set 6% Seller Contributions payable towards Buyer Closing Costs and Pre-Paid items.
Required Waiting Period after BankruptcyChapter 7 requires 4 Years from discharge date
Chapter 13 requires 2 Years from discharge date
Chapter 7 requires 2 Years from discharge date
Chapter 13 requires 1 Years from discharge date
Chapter 7 requires 2 Years from discharge date
Chapter 13 requires 1 Years from discharge date
Chapter 7 requires 2 Years from discharge date
Chapter 13 requires 1 Years from discharge date
Required Waiting Period after Foreclosure

7 Years from Completion

3 Years from Completion2 Years from Completion3 Years from Completion

To review home loan options with a Licensed Loan officer simply complete the form below to request a free consultation or call us now at 1-800-555-2098.

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Budgeting to Become a Homebuyer

budgeting for home ownership

You have found yourself in debt, but you have also found yourself wanting to buy a home.  You want to pay off the money that you owe all while saving up money for your dream home. It is possible? First off, you should know that you are not alone. Many people find themselves in situations such as this, but there is a way to come out of this and end up in a home that you love.

Budgeting is the Place to Start to Prepare for a Home Purchase

Let’s be real budgeting can be overwhelming, but hear me out! Instead of thinking of budgeting as a restriction think of it as a guide. A guide that will lead you down to a path of financial stability. And besides what is more terrifying — budgeting or being in debt?

Step 1) Budgeting: Track your expenses

Start by writing down your expenses. How much do you spend on food? Gas? Going out? Track what you are spending for one month and when you are done determine if that amount of money is over or under what you can afford.

Step 2) Budgeting: Reduce expenses

Figure out what things you can cut back on. Do you really need to do things like going out to eat five times a month? Probably not.

Look for alternatives to the things you normally do. Instead of going out to eat for lunch at work, pack your lunch. Instead of going out to the movies, rent one and have a comfortable night in with your friends, family, or significant other. If you want to go out try finding coupons for the place you are going and save money that way. One thing you should ask yourself when shopping for things that you really do not need is if you would rather have that particular item or a home.

Step 3) Budgeting: Save Money

Once you have figured out ways to cut back on spending, put the extra money into a savings account. Try and save up an emergency fund of at least $1000 or whatever you feel comfortable with. It can be hard to eliminate credit card debt, for example, when you do not have an emergency fund established because something expected can happen and force you to use your cards and bring you more into more debt.

One way to earn money is by selling your possessions that you do not want or need.  You can use the profits from this to reduce debt or save up for a down payment. Just make sure that you are receiving sales receipts for the items that you sale so that you have documentation for the lender on how the money got into your account. You could also use the money from the things that you sell to live off instead of taking money out of the bank.

Step 4) Budgeting: Pay down debt

When you have an emergency fund saved up, then it is time to start paying off your debts and raise your credit score! At the very least you should make sure you are making your minimum payments. Lenders usually look at the minimum balances that are reported to credit companies in order to calculate your debt-to-income ratio.

So once you have your emergency fund established use the money that you were putting into the fund into either the card/loan with the smallest balance to get it paid off quickly or into the card/loan with the highest monthly balance (if you are able to pay it off in a relatively decent amount of time).

This can take time. It can take up to 30 to 60 days to show that you have paid on a credit card or a loan. You can try calling your credit card companies to figure out when they report to the credit companies. This can help you find out when it will be best to pull your credit when applying for a mortgage.

What About Loans that Require Zero Down?

Piggy Bank

If you do not have money saved, you may still be eligible for a zero down home loan with Riverbank Finance.  We offer great zero down programs including the USDA Mortgage and VA Loan. USDA loans only apply for rural homes and VA loans acquire you to be eligible for military benefits. Ask your loan officer if you are eligible for these options.

Keep in mind, even with zero down loans, there are costs in addition to the down payment. those trying to get a mortgage would also need funds saved up for appraisals and closing costs. To save on cash at closing, a buyer could as the seller to pay for these costs as party of the sales agreement.

Low Down Payment Mortgages

A common misconception is that you need to save 20% for your down payment. While there are benefits to applying a large down payment, most people do not have access to that large of a bundle of cash. We have several low down payment options that might be perfect for your situation!

1% Down Conventional Loan

Riverbank Finance LLC is pleased to offer the Conventional 1% Down Mortgage with Equity Boost home loan program. In this program, you can purchase a home with 3% equity, but only 1% down payment. How does that work? You, the buyer, contribute 1% and we, your lender, contribute 2% giving you a total of 3% equity at close.

FHA Loan with Down Payment Assistance

Another great low down payment options is our FHA loan with down payment assistance. With this program you will get a gift of 2% of the sales price towards your down payment. This means that you would only need 1.5% down for the required down payment.

One of the most important things is to not make budgeting and saving money seem like a chore or else it might make you want to stop trying. If you need advice on what you should do in your situation give Riverbank Finance a call and let our trusted loan officers help you find a solution to your debt issues and help you get the home that you want.

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8 Common Mortgage Questions

For some, buying a home can be a scary experience, but it doesn’t have to be. The first step of the homebuying process should be to do research. Researching is one of the most important things that future homebuyers could and should do. Here are some commonly asked questions about mortgages and the homebuying process.

1. Am I able to get a mortgage if my credit is not that great?

Even if your credit score is not the greatest you may still be able to qualify for a loan. Having a higher credit score is beneficial though as it allows for buyers to get better interest rates. This saves them from paying thousands of dollars more than someone who has a low credit score. The minimum credit score for conventional loans is 620, while the minimum score that the FHA, VA Loan, and USDA Mortgage will allow is 580. That being said, lenders have their own minimum scores that they will accept.

2. What type of home loan is best for me?

It all depends on your situation. If you have a high credit score and money for a down payment, conventional would probably be a good choice for you. At Riverbank Finance, we have loan options that will pay up to 2% of the 3% down payment requirement if the client has a credit score of 720 or higher for conventional loans. This is great because then it means you only have to put 1% down on your home.

If your credit score is between 620 and 720, the down payment can be as low as 3%. If your credit score is not that great, a FHA loan would probably be the best for you, but you will need a 3.5% down payment. A USDA loan is great for those who are looking to live in a rural area and want to put zero down. Veterans can apply to get a VA loan which is also zero down.

Related: Michigan Down Payment Assistance Program

3. How do I get pre-approved for a mortgage?

Call up Riverbank Finance today if you are looking to get pre-approved. Our loan officers will be able to tell you over the phone whether or not you are pre-approved. You will be asked about your income, available assets, current debts, employment, details about the property, and credit. It is beneficial to get pre-approved because it not only lets the seller know that you have a lender ready to work with you, but it also tells the seller that you are a serious bidder.

4. What documents are required for a home loan?

Typically, you be required to send in the following documents:

  • Driver’s License
  • Social Security Card
  • 1 Month Worth of Paystubs
  • 2 Years of Most Recent W2s
  • 2 Years of Most Recent Tax Returns (if self-employed or commission)
  • 2 Months Bank Statements
  • Most Recent Quarterly Retirement Statement
  • Home Owner Insurance Quote
  • Purchase Agreement

Once your file is in processing you will be asked for additional documents specific to your situation.

5. Should I buy mortgage discount points?

That depends on your situation. One point usually costs about 1 percent of the mortgage and usually reduces your interest rate by 0.25 percent. Sometimes it does not make financial sense to buy points. Especially if you do not plan to live in the house for that long of a time. It can take a long time to make up the expenses that it cost to buy the points. If that is the case, then buying points may not be so beneficial for you. On the other hand, if you plan on keeping the property for a long time then buying the points can potentially save you thousand of dollars in interest.

6. How much do I have to pay for closing costs?

Closing costs will vary for each loan. They could range anywhere from 0 to 5 percent but usually average to about 2 to 5 percent of the purchase price. Closing costs typically include fees from title insurance, property taxes, mortgage application fees, and homeowners insurance. If you ask for seller’s paid concessions that can cut down on the amount of closing costs that you need to pay.

7. How long does it usually take to close?

At Riverbank Finance, we aim to close our loans within 20 to 30 days. The industry average time to close a mortgage is currently around 43 days according to the Ellie Mae mortgage survey. The amount of time can vary though depending on your situation. It is important to keep in touch with your loan officer and processor though the whole course of the loan. It is also extremely important to get the additional documents that are asked for in order to keeping the loan moving.

8. What does the process look like?

First, your loan officer will take you through the pre-approval process listed above. Your loan officer will then help you complete a loan application. After you are pre-approved or if you are pre-qualified you will be asked to send in your official documents. Your loan officer will check these over and make sure that they match up to the information given early.

After you have sent in a purchase agreement your loan will go into processing. You and your loan processor work together to send in the additional documents that the underwriter asks for in your conditional approval. Once all of these conditions are met your loan can be scheduled to close.

If you have any additional questions, please call Riverbank Finance at 800-555-2098 and ask to speak with one of our loan officers. Or sign up on our website. Remember the homebuying process does not have to be hard if you do your research up front!

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Use Your Tax Refund As a Down Payment to Buy a Home

Saving money for a down payment can be one of the biggest challenges in buying a home. Most loan programs require some form of a down payment from the home buyer. During tax season, this may be the perfect opportunity to qualify for a new home. IRS tax refunds are eligible as a source for a down payment for home buyers. With several low down payment options available, even a small tax refund may be the key to becoming a home owner.

Do I have to wait for my tax return to get pre-approved?

No, you do not need to wait to get your refund back to go through the pre-approval process. When you call in or request loan information on Riverbank’s website, you can let your loan officer know how much money you are expecting to get back.  Your loan officer can use that as a starting point to begin your mortgage pre-approval.  You should file your taxes as soon as possible that way you can receive your refund as right away. The quickest way to receive your refund is via direct deposit. January 29th is the first day of 2018 that the IRS will accept tax returns for 2017.

Low Down Payment Home Loans

You may be able to use your tax refund as a down payment to buy a home. With our low down payment home loans, even a small refund can be enough to help you become a home owner. Low down payment home loans include the following options:

Tips to increasing your IRS Tax Refund for a Down Payment

When it comes to mortgage qualifications, assets are a crucial part in the overall financial picture. To make sure you have the best chances at being approved you should document more than enough asset in the bank, retirement or of course from your tax refund. Here are a few tips to increase your IRS tax refund.

Claim Dependents on your tax returns.

During the year you have have your employer lower or remove your dependents so they withhold more of your income for taxes. When you file you will then claim any dependents including children, spouses or those that you financially support. This will help to boost your refund at tax time.

Contribute to your retirement account to get extra tax benefits.

If your company sponsors a tax deferred retirement account such as a 401k or 403b, you may be able to participate and lower your taxable income. If you are self employed or work for a business that does not have a formal retirement plan then you may be able to contribute to a qualifying Individual Retirement Account (IRA) to reduce your income and save for retirement.

Itemize your expenses on your tax return.

If you have enough in deductions, you may be able to itemize your deductions to lower your taxable income. Many times, people claim only the standard deduction. If you have enough qualifying expenses or charitable contributions then itemizing may help boost your refund.

Things You Should Not Do With Your Tax Refund

There are some things that you shouldn’t do with your tax refund when you are considering buying a home. Doing some of these things may cause your loan to be rejected due to certain guidelines that lenders follow.

Do not move money around without documentation

You should not elect to receive your refund in the form of cash or withdraw the money from your bank account immediately. A lender does not want to finance someone they feel could be money laundering. Even if you are not money laundering, but it looks as if you are your file can be denied if you cannot document your paper trail.

Do not waste your Tax Refund on things you do not need.

Another thing that you should not do is to waste the money that you have received. Getting a large chunk of change at the beginning of the year can lead to temptations. Be sure to use this money as a way to reach your financial goals.

Your tax refund can allow you to put a down payment on your new home and will decrease the monthly payment on your home. You can also look into receiving seller’s concessions then you can have some if not all of your closing costs paid for.

Why you should use your tax refund to buy a home.

For future homeowners tax refunds can be a great source of money to use as a down payment on a home. Although the refund can be tempting to spend on things that could be considered more fun like shopping or going on a vacation it is a better idea to use it towards an investment like a home.

There are advantages to owning a home vs renting. Monthly mortgage payments can cost less than renting an apartment and unlike an apartment you can sell the home and make money off of it when you are ready to upgrade. In many areas, renting can cost significantly more than owning your own home.

To review options on how you can use your tax refund to buy a home, Call Riverbank Finance today at 800-555-2098 if you are ready to take the first step in buying a home.

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Should I Refinance My Mortgage?

There are several reason why you might benefit from refinancing your home. Many people choose to refinance to simply lower their interest rate while others have goals of doing home improvements or debt consolidation.  Depending on your financial goals, refinancing your mortgage may be a smart choice.

  • Refinance to a lower rate
  • Refinance to a shorter mortgage term
  • Cash Out Refinance
  • Refinance to Drop PMI
  • Debt Consolidation Refinance
  • Refinance a FHA loan to a Conventional Loan
  • Refinance to a Reverse Mortgage

Rate and Term Refinance Loans

A rate and term refinance loan is a mortgage refinance that allows you to change the rate and the term for your mortgage. With this loan type you typically cannot get cash back at the closing.  This the perfect loan type to reduce your interest rate or to pay off your loan more quickly.

Refinancing to a Lower Interest Rate

Refinancing your mortgage to a lower interest rate is the most common type of refinance loan.  The rule of thumb is that if you can recover the costs associated with refinancing by the monthly savings in 3-5 years or less then it may make sense to refinance your mortgage.

With mortgage rates remaining low, there is no reason to pay a high interest rate on your home loan.  Many refinance loans do not even require a home appraisal and may have little to no closing costs.

Refinancing your home loan to drop your interest rate is a no-brainer if you plan on being in your home for the next few years and the monthly savings is enough to make sense for your situation. Ask a loan officer to help determine the time to recover your costs by doing a break even analysis.

Pay Off your Mortgage Quickly by Refinancing to a Shorter Term

If retirement age is just around the corner, you may have a financial goal of paying off your mortgage in the next 15 years. If you are currently in a 30 year mortgage then you may be able to drop your interest rate by going with a 15 year loan term. With the lower interest rates of 15 year mortgages your mortgage payment may stay the same or only increase a slight amount.

The benefit of refinancing to a shorter term mortgage is that your loan would be paid off in a fraction of the time saving you a large amount in interest. You do the math. If you currently pay $1,000 per month for your mortgage but your loan is paid off, that is $12,000 more per year in your pocket! If you save 10 years of payments that adds up to $120,000 which changes your financial picture.

Use our Mortgage Amortization Calculator to estimate the total mortgage interest paid on your loan.

Cash out Refinance Loans

A cash out refinance loan is a mortgage refinance that allows a homeowner to receive cash back from the equity in their home.  Once a homeowner has owned their home for a long enough period to accumulate equity by the increased property values they may have value in their home called home equity.

How can a Homeowner Access the Equity in their Home

To access the equity a homeowner could sell their home and receive the cash proceeds after paying off any mortgages. If a home owner wants to keep their home and get access the equity they have then a cashout refinance may be the perfect fit.

Limitations for Cashout Refinance Loans

Typically cash out refinance loans are limited at 80% loan to value (LTV) for conventional loan or 85% loan to value for FHA however a military veteran can access up to 100% of their homes equity with a cash out refinance.

Debt Consolidation Refinance Loans

A debt consolidation refinance is when a homeowner uses the equity in their home to pay off other debts by refinancing the balance into their mortgage.  This type of mortgage can be used to pay off high interest rate credit cards, personal loans, auto loans or even student loans.  Others may use a debt consolidation refinance loan to pay off IRS tax debt or liens against their property.

The benefit of a debt consolidation refinance would be to lower the overall interest rate and monthly payments of a homeowners debts.  For example if they currently  $1,000 for their mortgage, $300 per month for a credit card and $500 per month for their car loan, they may be able to consolidate their debts into a mortgage and have a payment of $1250 per month. In this example they would bring their monthly payments down from $1,800 per month to $1250 per month for an overall savings of $550 per month. This savings adds up to $6,600 per year!

Refinancing to Remove Private Mortgage Insurance (PMI)

Many homeowners refinance their mortgage to drop PMI, or Private Mortgage Insurance, from their payments. This can be done if you have 80% equity in your home.

Private Mortgage Insurance (PMI) is basically foreclosure insurance that protects your mortgage company in case you do not make your payments. There is not benefit to you as a homeowner having PMI other than it may allow you to initially purchase without a large down payment.

Refinancing from an FHA loan to a Conventional Mortgage

If you currently have an FHA loan then you most likely pay mortgage insurance. FHA requires mortgage insurance even if you were to purchase and place a 20% down payment. With current FHA guidelines, the mortgage insurance never drops off for most FHA loans. For this reason, it may make sense to refinance from a FHA loan to a Conventional Mortgage with no PMI.

Use our Conventional Mortgage Calculator to estimate your new mortgage payment.

How to Drop PMI from your Mortgage

You may need to pay for an appraisal to document your home’s new value as part of the refinance process.  For example, if your home appraises at $100,000 and you only ow $80,000 then you would have $20,000 in home equity which equals 20%.  By refinancing your mortgage with a conventional home loan you would not have PMI on your new mortgage.

Benefits of Dropping PMI from your Mortgage

Dropping PMI could save you hundreds of dollars off your monthly mortgage payments. If you have been aggressively paying down your mortgage balance or if you believe homes in your area have jumped up significantly in value, then speak with a loan officer and review options to refinance and drop PMI from your mortgage.

Other Reasons to Refinance your Mortgage

There are several reasons to refinance your mortgage as shown above. Others may have additional reasons to refinance such as removing a co-signer, changing your loan servicer that has poor customer service, paying down the principal and refinancing to drop the monthly payments, refinancing to a Reverse Mortgage etc. The list goes on!

To review all the benefits of mortgage refinance programs we suggest that you speak with a licensed loan officer. They will help to determine your financial goals and provide information on refinance options to accomplish your goals. Riverbank Loan officers are standing by to help at 800-555-2098 or you may request information by completing the short form below.

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Buy a Home with Just 1% Down!

Buy a Home with Just 1% Down and get up to a 2% Lender Gift towards your down payment. Buying a home has never been more affordable with our low down payment Conventional Mortgage.

SUBMISSION DEADLINE FOR PROGRAM: MAY 31ST, 2018

Unlike Down Payment Assistance programs, such as MSHDA, there is no 2nd mortgage required. This is a true gift at the closing from the lender that is applied to the down payment. This give you 3% equity at the closing!

This program is available through our FannieMae HomeReady Mortgage which offers low fixed rates on 10 year to 30 year mortgage loans.

1% Down Mortgage with No PMI

To get the lowest overall mortgage payment you could opt for our lender paid PMI option. This will allow you to have no monthly PMI included in your mortgage payment resulting in some of the lowest possible mortgage payments available!

Get Pre-Approved for  a 1% Down Home Loan

To get started with our low down payment mortgage simply call a licensed loan officer at 800-555-2098 or request information below.  You will supply some basic information to confirm you meet the income, credit and asset requirements for the program. If everything looks good, you will be given an Pre-Approval Certificate so you can start shopping for a home!

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EXAMPLE DETAILS: Borrower contributes 1% down, lender contributes 2% of the loan amount up to $5000 for the down payment and the borrower is responsible for any difference to get to the required 3% down. The principal and interest payment on a $200,000 30-year Fixed-Rate Loan at 4.625% and 97% loan-to-value (LTV) is $1028.28 with 0 points due at closing. The Annual Percentage Rate (APR) is 4.866%. The principal and interest payment does not include property taxes and home insurance premiums, which will result in a higher actual monthly payment. Rates current as of 01/15/2018.

4 Steps to Make Relocating to Michigan Go Smoothly

grand haven michigan light house

Have you ever wanted to make the move out of state but did not know how to go about the process? If you are ready for the big move and Michigan is your destination call Riverbank Finance and speak with our loan officers today!

Michigan has many attractions for people looking to relocate from another state. Although Michigan is mostly known for its lakes and for being shaped like a mitten, these are not the only things that it has to offer. Grand Rapids, for instance, was ranked by Headlight Data as having the fastest growing economy in the United States. There is always something to do. You could go visit Traverse City’s wineries or walk the dunes along Lake Michigan. Whether you enjoy to do Michigan probably has it!

Steps to Make Relocating to Michigan Go Smoothly:

  1. Research! Research! Research!

Research is one of the most important things that you can do to make moving to Michigan feel easy. If you have an idea on what type of location you would like to live in search it on the web.  If you are thinking that would like to live along the beach give a place like Grand Haven a try.  If hiking and being surrounded by nature is what you want then try the Upper Peninsula. Maybe you are interested in the city life, then give Grand Rapids a.k.a. “Beer City, USA” a try. There is a place for everyone in Michigan as long as you can brave our winters that is!

After determining the area of Michigan that you would like to live in check the stats of that area. What are the rates of unemployment, poverty, and crime in the area? How do the schools compare to others in the state? You should ask yourself what is important to you and what you expect to gain from the place you will live.

  1. Get Pre-Approved for a Home Loan

If you have decided that buying a home in Michigan is the best fit for your family, then the next step is to get pre-approved for a mortgage. Our licensed loan officers here at Riverbank would be more than happy to offer you a free consultation to review home loan options. You can apply for a home loan only, in person or over the phone. During the mortgage pre-approval meeting, your loan officer will review your income, assets and goals and recommend mortgage solutions that fit your needs.

  1. Find a Knowledgeable Michigan Realtor

Now that you have researched potential areas that you would like to live and gotten pre-approved for a mortgage, in its time to find a realtor. Try looking for a realtor that has experience in finding the type of home that you are looking for and in the area that you are looking in. If you know anyone in the area ask them for recommendations or search on the web. Your loan officer may also be able to recommend reputable Realtors to assist with your home purchase. It might also be helpful to find a realtor in your current state to help you sell your current home. It might not be possible for someone to purchase a new home when they are still paying for their current one.  Your Realtor should be able to help you coordinate the sale and the purchase of both homes to ensure things go as planned.  If you are able to, plan a trip to Michigan to visit the properties before moving here.

  1. Find a New Job in Michigan

As part of the Pre-Approval process, your loan officer will advise you on the requirements to find a new job and get an accepted offer. The job generally should be in the same field that you were working and the pay should be at the very least the same you are making at your current job or more. For those looking to get a job that is bonus or commission based, might want to think again. Lenders will need a similar pay history of 1 to 2 years depending on the program requirements. It is better to wait on getting one of these types of jobs until after you have closed on your loan and settled into your new home.

Call Riverbank Finance at 1-800-555-2098 and speak with our loan officers about your move. Hire those movers, pack up your moving van, and come join us here in the Great Lakes State!

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2018 Conforming Loan Limits and FHA Loan Limits Increased

On November 28, 2017, it was announced by the Federal Housing Finance Agency, or FHFA, that for 2018 the baseline loan limit for conforming loans will increase from $424,100 to $453,100. This is due to raising house prices and real estate appreciation. According to the FHFA, from the third quarter of 2016 to the third quarter of 2017, home prices have increased at an average of 6.8%. Therefore, conforming loan limits have increased by 6.8%.

How are Conforming Loan Limits Calculated?

The new Conventional Loan Limit does not apply to all areas of the United States. There are certain areas in the country that are considered to be high cost, such as Alaska and areas of California. In order for these areas to be deemed as high cost, 115% of the local median home value must exceed the baseline loan limit. In these areas, the baseline loan limit will increase by 150%. This makes the maximum loan limit for these areas $679,650, which was increased from $636,150. A map of the U.S. counties and their maximum loan limits can be found here.  There are no counties in Michigan that are considered to be a high cost area.

2018 FHA Loan Limits Increased

Staring January 1st 2018 FHA Loan Limits have increased its floor to $294,515 from $275,665. This means that buyers can purchase a home of $305,196 with the minimum down payment and still get an FHA loan. In high cost areas, FHA’s loan limit ceiling will increase to $679,650 from the current level of $636,150. In high cost areas, home buyer can purchase a home up to $704,300 and still use the minimum FHA loan down payment of 3.5%.

Do Other Loan Options Have Loan Limits?

USDA and VA loans do not have their own loan limit like FHA. These loan programs utilize Conventional loan limits set by the FHFA. VA may also allow larger loan amounts up to $1,500,000 if the borrower pays the funding fee at the closing over the 453,100 limit.

What if the Loan Size I Need Is Larger than the Loan Limits?

If the loan amount needed exceeds these limits then an option for you would be a non-conforming loan called a jumbo loan. These non-conforming loans follow a different set of guidelines and rates than conforming loans. For 2018, jumbo loans will be for loans that exceed $453,100. Riverbank Finance is also able to help with jumbo loans!

Jumbo Mortgage Loan limits

For loans over the conforming limit of $453,100, we are able to offer jumbo loans. Current Jumbo loan limits at Riverbank are set at 3 million dollars. The purchase price of a property can be above this limit however the buyer would need to pay cash for the difference. Our Jumbo loans options include 40 Year Interest Only Loans, 30 Year Fixed Rate Loans, 15 Year Fixed Rate Loans and Adjustable Rate Mortgages.

What are the Benefits of Conventional Loan Limit Increases?

Loan limits increasing is beneficial to clients as house prices rises because conventional/conforming loans offer the best rates. Higher loan limits allow borrowers to finance higher amount at low fixed rates. Jumbo loans typically do not offer as low of rates as conventional loans do which may be less attractive. Clients will have a wider range of houses they can get financed with a conventional loan. With our 97% Conventional Mortgages, a home buyer could purchase up to a $439,507 home with the minimum 3% down payment. For buyers that plan on utilizing a 20% down payment to avoid PMI, they can not purchase a home for up to $566,375 with 80% financing on a conventional loan.

To confirm the maximum loan amount you qualify for call a Riverbank Loan officer today at 800-555-2098 or request information below!

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USDA Mortgage Repair Escrow Program

What is a USDA Mortgage?

The USDA loan, or Rural Developmental loan, allows for homebuyers to purchase a home with a zero down payment.  This is great for people that want to live in a rural area and get a loan that is truly zero down.  Benefits of getting a USDA loan is that you may still qualify three years after the discharge date of your chapter 7 bankruptcy and three years after having a foreclosure.  The USDA website lists the areas of Michigan that qualify for this loan by county. You can also type in the address on the USDA website to confirm address eligibility as well.  Here is the link- https://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do

What if the House has Repair Issues?

Depending on the issue, Riverbank Finance may be able to help you by using the USDA Mortgage Repair Escrow program.  This program allows for the cost of the home to be combined with the cost of the repairs.  The cost of the repairs cannot go above 10 percent of the final loan price.  The term for a purchase or rate/term refinance using this loan is 30 year fixed.  The repairs are required to start within 30 days from the closing date and end within 180 days of closing.  Additionally, those interested in this program cannot use a contractor for the repairs with whom they have a conflict of interest with (i.e. family members or friends).

Related: USDA Rural Development Loan Calculator

What are the minimum requirements to qualify for the USDA Loan Repair Escrow Program?

In order to qualify for the USDA Repair Escrow Program you must meet some requirements.

USDA Repair Escrow ProgramThe requirements include:

  • A credit score of 620 or higher (at least 2 credit scores must be provided)
  • Must obtain an Accept/Eligible or Refer/Eligible recommendation from GUS
  • 10% of purchase price
  • Get a bid from a licensed contractor for the work to be done.
  • Standard USDA guidelines still apply.

Eligible Property Types:

  • 1 unit single family residences (no multi-unit properties)
  • Condominiums – HUD/FHA, VA, Fannie Mae, or Freddie Mac must approve or accept
  • New Manufactured Homes only – singlewide or multi-wide
  • Existing manufactured homes must follow guidelines that meet the Existing Manufactured Housing Unit Pilot Program
  • Planned Unit Developments

Is there a Limit for the Amount of USDA Repair Escrow?

Yes, the limit for the amount of USDA Repair Escrow is 10 percent of the final loan price.  This amount includes the cost of the repairs, reserve costs (1.5 times the cost of the repairs), 2 inspection fees ($165 each), and if required, the costs of permits.

What repairs can be done with the USDA Repair Escrow?

  • Carpet / Flooring
  • Paint
  • Repairs can be cosmetic
  • Or functional like installing a new water heater or buying a stove for the home

What repairs are ineligible for USDA Loan Repair Escrow?

  • Roof repairs
  • Foundation/structural repairs – the structure of the building may not be disturbed by the repairs
  • Electric repairs
  • Plumbing repairs

If this looks like the loan for you, please give our trusted loan officers at Riverbank Finance a call at 1-800-555-2098 or apply on our website today!

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The Mortgage Process: What Happens After Pre-Approval

Congratulations! You passed the pre-approval stage for getting a home, but what happens next?

Once you have a pre-approval letter from your lender, you can start looking for a home to purchase. Keep in mind that the letter is only good for 60 to 90 days, depending on the type of approval you received.

Why Should I Get Pre-Approved?

A pre-approval gives you an edge when shopping for a home because realtors and home sellers know you are already qualified to buy, according to a lender’s standards. It also means your time from agreeing to buy and closing will be faster, since approval is already done. During your search, keep the lender estimates in mind. It is an amount you can comfortably afford for a home. It is not advisable to go above it.

Once you have found a home that meets your needs and your pre-approval amount, you can start the sale process by giving the seller the pre-approval letter and making an offer on the house. If the seller accepts your offer, the next step is to start the underwriting process.

 

What is the Mortgage Underwriting Process?

Now that you have an accepted offer on a house, you will work with your loan officer to sign an official mortgage application. This will start the loan process and allow us to submit your application to underwriting for approval. If you have not yet provided the supporting documentation to verify the information on your application you will need to do this now. These documents will include income, assets, and credit documentation.

Required Documents to Apply for a Mortgage

  • Drivers License
  • Social Security Card
  • 1 Month Paystubs
  • Most Recent 2 Year W2 Statements
  • Most Recent 2 Years Tax Returns (if self employed or commission)
  • 2 Months Bank Statements
  • Most Recent Quarterly Retirement Statement
  • Home Owner Insurance Quote

(Additional Documentation may be required in Underwriting. Not all borrowers will need to present these documents – Ask us about our Automated Home Loan process where we electronically verify your information.)

Once your application is signed (we use electronic signatures to speed up the process), then your loan is submitted to an underwriting. The underwriter will review the information to confirm that it matches what was submitted on your application. They may have questions or request additional documentation at this time. Once your loan is “Conditionally Approved” in underwriting we will move to the appraisal.

What Happens During the Appraisal Phase?

An appraisal takes into account the interior of the home, the exterior, and the value of surrounding homes in the neighborhood. Once the appraisal is over, the loan can be processed. An underwriter will process the loan and clear the loan for closing. The appraisal must come in either greater than or equal to the value of the purchase price. If it comes in low you may need to bring additional cash or renegotiate with the sellers.

Once through processing, your loan will be scheduled to close. This is where you will sit down with an escrow agent or a notary to make everything official and legal. 

The Final Stretch: Closing Costs

The last part of the process, before you can start packing up your moving boxes, is the closing. Closing costs are what you pay for outside of the home itself. So, if you get an appraisal, the appraiser needs to be paid for their services. In addition, there is title insurance fees, taxes, tax services, and other fees that come with closing. These fees can range anywhere from 0-5% of the cost of the loan. 

If you negotiated that the sellers will pay these closing costs and pre-paid items then they will cover them at the closing otherwise these fees will need to be paid by you at the time of the close. If you are short on cash, ask your loan officer if you qualify for lender paid closing costs. This is where we will give you a credit at the close to cover some or all of your 3rd party fees. You will always need to cover your own down payment funds (unless a special program allows differently).

In summary, to start buying a home, the first step is the home loan pre-approval. Be sure to make an appointment with a Riverbank Finance professional loan officer today by calling (800) 555-2098.

Request Information Now!