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Conventional/Conforming Loans

The term "Conforming" means the borrower's qualifications conform to FHLMC or FNMA Underwriting Guidelines. Conforming loans are the most common type of mortgage. Conforming loans offer borrowers the lowest rates and best terms. With down payments of less than 20%, conforming mortgages usually are insured by private mortgage insurance companies (PMI).

Government issued mortgages

Borrowers who do not meet conforming guidelines may qualify for a VA | FHA | or FmHA loan. The underwriting guidelines are different. This gives borrowers more alternatives to qualify for a loan. These loans are more expensive and have more paper work.

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Non-Conforming loans have the most flexible underwriting guidelines. Borrowers who do not or choose not to meet conventional or government guidelines may find a non-conforming loan their best option. Borrowers most likely to need a non-conforming loan are Self-Employed | Have Impaired Credit | Have No Down Payment | Want to Consolidate Debt | Rates will run 1/4 to 2 percent higher than conforming plus 1 to 3 points.

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Equity/Second Mortgages

You as a home owner may want to borrow the equity in your home. Equity is the difference between current appraised value and the current amount that your owe on the property.

Banks typically offer three types of Equity loans:

  1. Line of Credit up to 100% of the equity (Can be used like a checkbook)
  2. Low Equity up to 100% of the equity (You take the whole loan at once)
  3. No Equity up to 125% of the appraised value. (You take the whole loan at once)

Borrowed funds may be use for debt consolidation, home improvement, cash reserves or any other worthwhile purpose. Rates range from 9.5% - 16.50%. (That is a lot of interest!)

We recommend you consider a new first mortgage instead of a second mortgage or line of credit with your bank. With our simplified process, low costs, innovative refinance programs, and the much lower rates this is typically a better financial move!

Refinance Your Mortgage

Lower Your Rate - Consolidated Debt - Convert ARM to Fixed Rate
Balloon Note
Coming Due - Convert Land Contract to Permanent Loan

There are two basic options for refinancing your current mortgage, Rate and Term or Cash Out. Each of these options have various sub-options that you may discuss with an experienced Mortgage Consultant.

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Rate and Term Refinance
Rate and Term refinance permits you to lower the interest rate, change the term of the loan or convert an ARM to a Fixed Rate Loan. You may not consolidate loans/debt or take cash out. The exception is if you are borrowing less than 80% of the appraised value of your home.

Cash out Refinance
Cash out refers to the refinancing of a loan where you will borrow equity from your home. If your home is appraised at $100,000 and your outstanding mortgage loan is $60,000, it is possible borrow up to 80% - $80,000 conforming or 100% - 100,000 non-conforming. The new mortgage of $80,000 will pay off the $60,000 loan and provide you with $20,000 conforming or $40,000 non-conforming.

What are the Benefits?
You can obtain cash to pay off debts, taxes, collections, liens, judgments and unexpected or future expenses. You can use the money for cash reserves, do home improvements, make an investment or use the money for any other worth while purpose.

The refinance transaction can also provide you with a low fixed rate mortgage that will save you money every month for the life of the loan. Another bonus, it's tax-deductible.

How can we help you? Rate One Mortgage can find a loan suited to your financial needs. We offer rate and term or cash-out for Owner-occupied homes, Non- owner occupied homes, and No income verification with low, affordable rates.

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Steps in the Mortgage Application and Closing Process

Step 1. Application:

Filling out a mortgage application, known as the Form 1003, starts the process. You may make an application several ways; in person, telephone, fax or Internet.

By far the easiest and quickest way to complete the Form 1003 is online.

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Step 2. Credit and Documentation:

Once you have completed your online application you will be given instructions to print and sign the application and fax it, along with certain documents such as, last two years W2 forms, last 30 days pay check stubs and last two months checking/saving statements for supporting information. (Note, items may vary according to the loan program you may need.)

Step 3. Shop for the best rate and terms for which you qualify:

With the information supplied in Steps 1 & 2 Rate One Mortgage will match you specific needs with the dozens of investors and hundreds of loan programs available to find the best program, rate and terms for which you qualify. Depending on your credit and mortgage needs you may receive a conditional approval within minutes or the process could take several days.

Step 4. Conditional Pre-approval:

Based on the results in Step 3 your Mortgage Consultant will know whether he/she will be able to issue a Conditional Pre-approval letter. This letter acknowledges that the borrower is Conditionally Pre-approved for a specific loan amount and type providing certain conditions are met. (Note, typical conditions are appraisal, clear
title, full insurance and no change in employment status or credit status etc.)

Step 5. Appraisal Deposit

Once you've signed a contract to purchase a home, you will make a $300 deposit to pay toward the cost of the independent appraisal that may be required.

Step 6. Processing:

At this point the loan then goes into what is known as processing. The Processor will collect any information or documentation asked for if not already in your file. The information is matched to the application and any discrepancies noted and addressed. At this time title and the property appraisal are ordered. When these items are received the file is sent to the underwriter.

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Step 7. Underwriting:

The Underwriter assesses the risk factors and will issue a list of conditions or stipulations for Processing to complete. When all the conditions are met, the Underwriter notifies Processing that there is a Clear to Fund. (Note, the time to complete Steps 6 & 7 may vary due to the type of loan and the length of time it takes to receive and clear all the conditions. Normally this takes three to seven days. If there is a major problem(s) with the appraisal, title, credit or proving source of funds it will take longer.)

Step 8. Clear to Fund:

Clear to Fund is issued when all conditions have been met and the lender agrees to sign off on items requested. Closing Documents are ordered and sent to the title company, attorney's office or the escrow agent. All of these types of organizations may close a loan, depending on state and lender guidelines.

At this point a closing time and date is agreed upon between the lender, closer, borrower(s), seller(s) and their representatives. The borrowers should contact the title company, attorney's office or escrow agent to find out the exact amount of money they must bring to the closing. (Note, most agencies will only accept cashier's checks or money orders, no personal checks or cash are accepted.)

Step 9. Funding:

There are different guidelines for each state. Some require funds to be at the table and other states will do what is called a dry funding. The difference is that at a dry funding the loan will actually close without the money being there. The funds will be sent after the loan documents are reviewed by the lender. All lenders do however require a copy of the HUD1 or Settlement sheet be reviewed before either the wire transfer is sent or the check is made acceptable for deposit. In other words they want to make sure everything is correct before disbursement occurs. In the case of a refinance there is a three day period of rescission. This allows the borrowers the option to change their minds regarding the new loan. After the three day period is up, the loan funds and disbursement will occur.


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Consumer Information on Home Purchasing and Related Topics

U.S. Department of Housing and Urban Development
451 7th Street, SW
Washington, DC 20410
Web site: www.hud.gov

For information regarding housing discrimination issues contact:
Office of Fair Housing and Equal Opportunity (see above HUD address)
Web site: www.hud.gov/fhe/fheo.html

For information about RESPA contact:
Office of Consumer and Regulatory Affairs (see above HUD address)
Web Site: www.hud.gov/fha/sfh/res/respa_hm.html

For information about programs and pamphlets offered
by the Department of Veterans Affairs,
contact your nearest VA Regional Office.
Web Site: www.va.gov/vas/loan

For information about rural housing loan programs contact:
Department of Agriculture Rural Development/Rural Housing Services
Stop 0783
Washington, DC 20250
Web Site: www.rurdev.usda.gov

For information about the Truth in Lending Act and
the Equal Credit Opportunity Act contact:
Federal Reserve Board
20th Street and Constitution Avenue, NW
Washington, DC 20551


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