Loan Programs

As a mortgage broker, we've partnered with several national and local wholesale lenders that offer a wide array of loan programs to meet your needs. Partnering with these top lenders gives us the ability to shop around for both better rates and programs for our customers. Below is a list of some of these different programs.

Fixed Rate Mortgages

This is pretty much every loan that I originate. I love the certainty of not having to worry about your payment changing drastically like you would have with an ARM loan.

The most common type of mortgage program where your monthly payments for interest and principal never change. Property taxes and homeowners insurance may increase, but generally your monthly payments will be very stable.

Fixed-rate mortgages are most commonly available for 30 years, 20 years, 15 years and even 10 years. There are also "bi-weekly" mortgages, which shorten the loan by calling for half the monthly payment every two weeks. (Since there are 52 weeks in a year, you make 26 payments, or 13 "months" worth, every year.) We also a fixed rate program where you can pick your term, anywhere from 11-30 years.

Fixed rate fully amortizing loans have two distinct features. First, the interest rate remains fixed for the life of the loan. Secondly, the payments remain level for the life of the loan and are structured to repay the loan at the end of the loan term. The most common fixed rate loans are 15 year and 30 year mortgages.

During the early amortization period, a large percentage of the monthly payment is used for paying the interest . As the loan is paid down, more of the monthly payment is applied to principal . A typical 30 year fixed rate mortgage takes 22.5 years of level payments to pay half of the original loan amount.

FHA Loans

If your credit scores are good (>680-700) and you have a 5% down payment you're probably going to be better off with a Conventional loan. If your credit scores aren't great or you can only come up with 3.5% FHA might be an alternative to Conventional. Make sure you consider the higher PMI rates (monthly) and the UFMIP (Up Front Mortgage Insurance Premium - 1.75% of your loan amount - $7000 on a $400,000 loan).

An FHA loan is a mortgage insured by the Federal Housing Administration.

Contrary to popular belief FHA loans are not just for first time home buyers. Here are some of the benefits:

  • Lower down payments. FHA loans usually require just a 3.5% down payment. Like most Conventional loans, down payments can also be gifted to the borrower from family members.

  • Lower closing costs. FHA loans will typically have lower closing costs compared to a conventional loan at the same interest rate. The downside to FHA is the Up Front Mortgage Insurance Premium and Annual Mortgage Insurance is much more expensive.

  • Easy credit qualifying. Those with less-than-perfect credit are more easily approved for a loan through FHA programs because the federal government insures them therefore allowing the banks to lend more freely.

Rates aren't as credit score sensative

USDA Rural Housing Loans

Good option for the right buyer... low monthly PMI and good rates are the benefits. Harder to get approved for with the income/location restrictions and some realtors tend to not want to deal with USDA buyers. USDA from time to time will run out of funds for a quarter and that could potentially delay your closing.

Are you ready to own a home but are not sure you will qualify due to lack of a down payment?

Rural Development may be able to help you! USDA Rural Development has partnered with Schaefer Mortgage to help extend 100% financing opportunities to rural individuals and families.

Advantages of a USDA Rural Housing Loan include:

  • 102% Financing (Up to Appraised Value)

  • Minimal PMI

  • No Down payment Required

  • Not just for first time home buyers

  • No reserves required

  • No limit on seller concessions

  • 100% Gift Allowed

  • Liberal compensating factors

  • Liberal credit score requirements

  • Competitive fixed 30-year rates

The Rural Development guaranteed loan program has assisted thousands of customers just like you.

VA Loans

A Veterans Administration (VA) loan can be used to help American servicemen or women and/or their spouses secure financing for a mortgage purchase. You can check with the veterans administration (through its website or through other information exchanges) to find out whether you are eligible given your service history. Only service members who have received honorable discharges and who have served 90 days or more may qualify for VA loans. Bear in mind that the Veterans Administration isn’t actually giving money towards your house or property. It provides insurance to lenders that you will make good on your obligation. If you get a loan for $417,000 or less, the VA will back you (this number may vary depending on the terms of your contract and agreement with the lender).

Advantages of a VA Loan include:

  • No down payment required

  • Reduced interest rates

  • Loans up to $417,000

  • 30 and 15 Year Fixed Loans

  • No PMI

  • Limited closing costs

  • No pre-payment penalty

  • 4% Seller Concessions

Jumbo Loans

Higher rates, and harder to come by after COVID, but a Jumbo loan may be your only alternative. If the situation fits, I typically like to do a Conventional first mortgage with a piggy back HELOC (Home Equity Line of Credit) to avoid the higher interest rates and much stricter lending guidelines.

When you are ready to make a purchase, you are going to be faced with unique terms such as conforming and jumbo loans. So, what is a jumbo loan?

Home loans are classified in a wide variety of ways. They can be classified by the amount loaned, whether the interest rate can be adjusted or not, the length of the payback period and so on. A fairly common and simple term to understand is the jumbo loan.

A jumbo loan is simply a mortgage in excess of the amounts set by government backed agencies that buy or guarantee loans. Companies such as Freddie Mac, Fannie Mae, HUD and what have you will guarantee the purchase of a loan from a lender if certain conditions are met. A discussion of those conditions is beyond this article, but one of them is the amount being borrowed. Depending on the agency in question, the limit is roughly in the $724,500 range. If the amount you are borrowing is less than this amount, then it is known as a conforming loan. If you need to borrow more, the loan is known as a non-conforming loan or “jumbo” loan.

Jumbo loans are different from conforming loans in a number of ways. Since no government agency is guaranteeing them, they are considered riskier. If you fail to pay, the lender is stuck with the home instead of simply getting paid by Fannie Mae or some such group. The situation is also considered to have more risk because higher priced homes are generally harder to sell quickly. While this wasn’t necessarily true in the recent hot real estate market, it is when things return to normal.

Given the higher risk from the perspective of the lender, you can expect to be treated a bit differently. In this case, lenders are going to charge higher interest rates than you would be able to get with a conforming loan. Before you panic, keep in mind we are talking about an 1/8 - 1/2 of 1 percent of a point in interest.

Adjustable Rate Mortgages (ARM)

I barely ever originate Adjustable Rate Mortages... Yes, there's definitely a benefit in the right situation, but I've had multiple friends that are a lot smarter than me get into ARMs and end up regretting it. This usually happens when you don't think you're going to stay in your house as long as you do and you end up realizing you could have saved more money with the certainty of a Fixed Rate Loan. Perfect example is when a homeowner realizes that they can keep their starter home, rent it out, and buy their move up home.

With today's historically low Fixed Rate Mortgages, it's less common for us to see customers looking for an Adjustable Rate Mortgage because ARM's are riskier. Most ARM's have a low introductory rate, which is good anywhere from 1 month to as long as 10 years.

These loans generally begin with an interest rate that is 0.25-1% below a comparable fixed rate mortgage, and could allow you to buy a more expensive home.

However, the interest rate changes at specified intervals (for example, every year) depending on changing market conditions; if interest rates go up, your monthly mortgage payment will go up, too. However, if rates go down, your mortgage payment could drop also.

There are also mortgages that combine aspects of fixed and adjustable rate mortgages - starting at a low fixed-rate for seven to ten years, for example, then adjusting to market conditions. Ask your mortgage professional about these and other special kinds of mortgages that fit your specific financial situation

Most adjustable rate loans (ARMs) have a low introductory rate or start rate, some times as much as 1.0% below the current market rate of a fixed loan. This start rate is usually good from 1 month to as long as 10 years. As a rule the lower the start rate the shorter the time before the loan makes its first adjustment.

Index - The index of an ARM is the financial instrument that the loan is "tied" to, or adjusted to. The most common indices are the LIBOR (London Interbank Offered Rate) and the 1 Year Treasury Security.

Margin - The margin is one of the most important aspects of ARMs because it is added to the index to determine the interest rate that you pay when your rate adjusts. Margins are typically around 2.25%. e.g. if the current index value is 1.75% and your loan has a 2.25% margin, the adjusted rate is 4.00%.

Interim Caps - All adjustable rate loans carry interim caps. Many ARMs have interest rate caps at each adjustment period (usually 1% or 2% every 6 months or a year after the initial fixed term).

Lifetime Caps - Almost all ARMs have a maximum interest rate or lifetime interest rate cap. The lifetime cap varies from company to company and loan to loan. 5% is the typical lifetime cap.