Loans Archives - Assurance Financial

Loans insured by the Federal Housing Administration (FHA) are the most common and, sometimes, the most helpful, depending on your situation. Created in 1934, The Federal Housing Administration was a result of the National Housing Act. This division of the government was established to increase home construction, reduce unemployment and operate various loan insurance programs. The FHA is not a loan lender, nor does it plan or build houses. Instead, it acts as the insurer on thousands of loans for Americans who might not otherwise be able to afford or qualify for a home loan. Since the FHA is not a mortgage lender, these loans are typically acquired from an approved lender. Not every FHA-approved lender offers the same attractive interest rates and costs that Assurance Financial does, so consumers should weigh their options before committing to a loan.

How & When are FHA Loans Helpful?

The FHA loan is a mortgage insured by the Federal Housing Administration. Borrowers with FHA loans pay for mortgage insurance to protect the lender from loss if the borrower defaults on the loan. The FHA loan program offers a unique opportunity for those with less-than-perfect credit to get approved in situations they otherwise wouldn’t. Minimum credit scores for FHA loans depend upon the type of loan the borrower needs. However, in general, to get a mortgage with a down payment around 3.5 percent, the borrower will likely need a credit score of at least 580 or higher. Borrowers with scores between 500 and 579 are liable to make a down payment of at least 10. Borrowers with credit scores under 500 are usually ineligible for FHA loans, but the FHA will make exceptions for people with “nontraditional credit history” or “insufficient credit.” Due to the mortgage insurance on FHA loans, lenders can—and do—offer these loans at incredibly attractive interest rates. FHA guarantees 30-year fixed rate mortgages with as little as 3.5% down payment—plus borrowers can apply a seller’s credit or family gift towards closing costs. And if you would prefer a loan with an adjustable rate, our FHA adjustable rate mortgages (ARMs) can help you get you into the home of your dreams, with a low initial interest rate. The FHA also has a unique loan program for borrowers who need some extra cash to complete repairs on their homes. The most notable advantage of these loans is that the loan amount is based upon the value of your home after you’ve finished your repairs – rather than its current value.

Who Should Apply for an FHA Loan?

People without great credit – Most lenders look for credit scored higher than 660, but FHA loans allow approval with credit scores as low as 500. Your history will, however, affect your interest rate and down payment. FHA loans frequently have lower down payment – depending on your credit – to allow lower-income borrowers to enter the market.
People who have filed for bankruptcy in the past – One of the most significant benefits of an FHA loan is its lenient approval process. By having the mortgage insured through the FHA, lenders are more likely to agree to a loan in situations they otherwise wouldn’t.
New homeowners – For most new homebuyers, an FHA loan provides them with an accessible route to financing their homes. New homebuyers usually are just getting on their feet financially, and the low-down payments of an FHA loan are the most attractive benefit.

If you think an FHA loan is for you, contact one of our home loan experts today! We will make sure you have everything you need to make the right decisions and helping you get approved as seamless as possible.

Building or restoring a home is a significant commitment that requires a decent amount of time and money. Luckily, construction loans exist to remedy this problem. Before the recession in 2008, small builders had better access to capital, but now they frequently put the buyer in the position of obtaining the construction loan. These loans can be tough to acquire without previous banking history due to a lack of available collateral— such as a finished home. Construction loans are typically short-term loans with a maximum of one year and have varying rates. This type of loan will also have a higher rate than a permanent mortgage loan. Borrowers should be prepared to build some allowances into their construction timetables since delays due to weather and material or labor availability are reasonably frequent.

When and How are Construction Loans Useful?

As the borrower, you have several options when building your own home. You can get a construction loan or use the equity in your existing home to finance building your house. Once you settle for this option, it’s time to find a homebuilder. Hiring an architect is like hiring any professional — you want to work with the best. Contact your local chapter of the National Association of Home Builders to get recommendations, and ask your friends, family or known real estate agents who specialize in new home construction. When interviewing possible builders make sure they have experience in the type of residence that you want. Ask about their licensure and insurance, and make sure they’ve got a solid reputation within your community. After construction is completed — when a certificate-of-occupancy is issued, and contractors have been fully paid — the borrower’s loan will usually roll over into a mortgage loan. Some lenders will combine these two loans into a single 30-year loan with one closing. This is called construction-to-permanent financing. However, these types of loans pose a greater loan-to-value risk to the bank so borrowers should be prepared to put down higher down payments or more collateral. If you own the land already, you can use that as collateral. Our construction loan program offers competitive fees and rates, as well as flexible draw schedules, to keep you and your builder or contractor moving efficiently throughout the process.

But Isn’t New Construction Only for the Wealthy?

There are several ways you can finance your new construction, no matter the situation. Whether it’s financed by the builder or the buyer, we will help you find the one perfect for you and your lifestyle. There isn’t a required minimum down-payment of 20% because the down-payment will depend on numerous factors. Depending on the equity of the land, the location, your situation – it can all change the amount of down-payment required.

But the Loans are Limited and I Need to Own the Land First, Right?

If you own the land, the equity will act as all or part of your down-payment. If you do not own the land, it will be purchased with the first draw after the construction loan is closed. Loan options, along with down-payments, vary depending on many factors. However, the key thing to remember here is that there are options out there for you. Depending on the lender, the type of home, and terms, your options for construction-to-permanent loan options can vary.

There are different requirements for each loan, and while they are uncommon, they are not unusual. If you’re interested in applying for a construction loan, contact one of our home loan experts today!

Is your dream home a little more expensive than most lenders will agree to? Well, have no fear, a jumbo loan is the best way to get the financing you need for your dream home. Jumbo loans were created to help people move into a dream home, even if it was more than most lenders would agree. Because of the amount of money involved, the risk of this type of loan is high. Jumbo mortgages typically exceed conforming loan limits to get buyers into luxury properties. More recently, jumbo mortgage rates have been historically low, which is attractive to people wanted to borrow large amounts. In addition to low rates, interest on jumbo loans — up to $1 million— can be tax deductible, but you’ll need to check with a qualified accountant. If you want a loan amount over the conforming limit, it is possible to use a non-jumbo conventional loan plus a second mortgage to make up the difference.

When & How are Jumbo Loans Helpful?

If you’ve heard the term “Jumbo Loan” before and have been confused as to what it means, that’s understandable. The “Jumbo” in “Jumbo Loan” doesn’t refer to the size of the house, rather, the price. A Jumbo Loan is a mortgage loan exceeding the loan limits established by government regulation. The jumbo loan limit is $424,100. However, it does go up to as much as $625,000 in more high-cost areas of the country. Jumbo loans do not fit the typical standards of mortgage loans, so they are a great way for qualified buyers to purchase a luxury home. The ideal bowers will have low debt-to-income ratios, high credit scores, and the ability to put down a large down payment. If you fit these requirements, you may find that a jumbo loan will get you into the house you desire. If this fits your situation, let us know. We’ll get you the financing you need at payments you can afford!

What Does My Credit Score Need to be to Qualify for a Jumbo Loan?

The higher, the better. Typically, to get approved for a Jumbo loan you need a credit score of 700 or above. However, this may vary with lenders. Typically, lenders will require a down payment of at least 20 percent. This price range is because there are no private mortgage insurance options for Jumbo loans. As with the mortgage, interest rates will vary depending on the lender. However, due to the amount involved, interest rates can exceed $1 million. The good news is that this amount is tax deductible. If the price of the home you want to buy is over $424,100, then this loan is for you. Anything above this range is beyond government regulations, so there are not private insurance options.

If your dream home required you to apply for a jumbo loan, contact one of our home loan experts today! We will help you get everything you need to get approved as quickly as possible.

everything you need to know about usda rural loans

Potential homeowners have a variety of options when it comes to securing mortgage loans. One of these options is a USDA rural loan. But what exactly is a USDA loan? How can an interested homebuyer get approved for a USDA home loan? What are the interest rates, income limits and other requirements? Here at Assurance Financial, we have the answers for you.

What Is a USDA Loan?

The United States Department of Agriculture (USDA) offers loans to people who currently live or want to live in eligible suburban and rural locations. If you and your property are eligible, the USDA rural loan may be an excellent financing option for you.

What Is the History and Intent of the USDA Loan Program?

In 2014, as a part of its Rural Development program, the USDA invested nearly $20 billion to help thousands of families buy and improve their homes. This program is designed to enhance the quality of life and economies in suburban and rural areas. It offers no down payment and low-interest rate mortgage options readily available to eligible areas.

the usda invested nearly 20 billion to help thousands of families buy and improve homes in 2014

USDA loans were created with the intent of serving people who have lower incomes. For a conventional loan, high-income earners can generally get approved easily, while those with lower incomes may struggle to secure a similar type of mortgage loan. USDA loans were created for those people, and even have income limits in place that prevent applicants who have a larger income from qualifying. USDA loans were also formed to focus on rural communities, so you cannot qualify for a USDA loan for a property in a metropolitan area.

Contrary to popular belief, you don’t need to be a farmer or to become a farmer to secure a USDA rural loan. A USDA loan can certainly be used to purchase a farm, but it can also be used to buy any residential home in a rural or sometimes suburban area. You don’t need to grow crops to secure a USDA rural loan as long as you meet the income and other eligibility requirements.

The intent of the USDA rural loan program was to give potential homebuyers an affordable and accessible financing option. At Assurance Financial, we strive to align our application process with those qualities in mind by making every step as simple and fast as possible.

Who Typically Uses or Benefits From a USDA Rural Loan?

who typically benefits from a usda rural loan

Rural loans all center around being in an eligible area. If you live in an eligible area, you can use and benefit from a USDA rural loan in several different ways.

If you are repairing or renovating an existing home in the eligible area, you can get up to nearly $30,000 in assistance. Don’t worry if your income is low, as these types of loans are meant for low-income borrowers. And, while lenders will look at your income and credit history, the application is very lenient when it comes to credit. The better credit you have –– the sweet spot is 620 and higher –– the less strict your underwriting will be and the better your loan terms may be.

USDA mortgages exist especially for high-need applicants, such as:

Those without safe or sanitary housing.
Those who aren’t able to secure a traditional mortgage loan.
Those whose income falls below the low-income line in their region.

Loans are limited to homes that are equal to or less than 1,800 square feet and hold a value that is less than the region’s loan limit. Nationwide, the limit is generally at $216,840.

So what are the benefits of a USDA rural loan for eligible borrowers? A USDA loan:

Is an affordable financing option for those with low or moderate income.
Can offer 100% financing, meaning you may be able to also roll your closing costs into your mortgage.
Offers one of the lowest mortgage insurance rates on the market, second only to VA loans for veterans. You may be able to avoid mortgage insurance altogether with a larger down payment.
Does not require a down payment.
Is not limited to first-time homebuyers.
Offers 30-year fixed rate terms.
Allows for seller contributions to closing costs.

USDA rural loans can be an excellent financing option with a ton of great benefits.

Who Can Qualify for a USDA Loan, and What Can the Loan Be Used For?

The uses and benefits of a USDA rural loan may sound appealing, but can you qualify for a USDA loan? Review the requirements to determine whether you can get approved for a USDA home loan and whether this loan is right for you:

you must prove your us citizenship or eligibility for a usda loan

Income level: Your income is relatively low for your region. USDA loan income limits are determined by factors such as region and household size, so check the income eligibility page to see if you qualify.
Type of property: Your loan will be used for a primary residence. If you’re opting for a repair loan, you’ll need to occupy the property.
Credit history: You are able and willing to meet credit obligations. Your ability to meet your credit obligations must also be verifiable, such as whether you have a reliable income.
Citizenship: You are a U.S. citizen or eligible noncitizen. Noncitizens must be able to meet the requirements for eligibility.
Location of property: Your new property is eligible. Your property won’t be eligible in a metropolitan area, but a suburban area may be eligible.
Debt-to-income ratio: Your monthly payment will be equal to or less than 29% of your monthly income if your credit score is 680 or less. Unless your credit score is above 680, your debt-to-income ratio also cannot be greater than 41%.

To be eligible for a USDA rural loan, you must prove your U.S. citizenship or eligibility as a noncitizen, dependable income –– typically for a minimum of two years –– and acceptable credit history. Most lenders want borrowers with a credit score of 620 or higher, but those with lower scores can still be eligible by meeting stricter underwriter requirements. USDA loans also usually offer low interest rates and don’t require a down payment. You may need a decent credit score and history, but a high score isn’t necessary for qualification.

Maybe you qualify for a USDA loan, but what exactly can you use the loan for?

There are three types of USDA home loan programs — loan guarantees, direct loans and home improvement loans or grants.

1. USDA Loan Guarantees

usda loan guarantees

The USDA guarantees mortgages issued by a participating local lender, similar to VA and FHA loans. This is a 90% guarantee and allows eligible buyers to get low mortgage interest rates without a down payment. However, you will need to pay a mortgage insurance premium if you do not put money down. With a guarantee, if you are unable to pay back your mortgage, the government will cover the losses for the lender. The amount you finance cannot exceed the value of the home or purchase price.

A USDA guaranteed loan comes with income limits, but these are higher than for USDA direct loans. Guaranteed loans also charge an upfront fee of 1% along with a monthly fee of 0.35% for mortgage insurance. For a loan of $120,000, for example, a borrower would pay an initial fee of $1,200 and a monthly mortgage insurance fee of $420.

To calculate your upfront cost on your USDA guaranteed loan, multiply the loan amount by 0.01. To calculate the monthly mortgage insurance fee on your guaranteed loan, multiply the loan amount by 0.0035.

2. Direct Loans

you may be required to undergo education in homeownership

Direct loans issued by the USDA are for low and very, very low-income applicants. These income thresholds vary by region, and the maximum amount you can finance depends on how much you’re capable of repaying depending on your income, any other debts and any payment assistance you may be eligible for. Interest rates are around 3.5% for the majority of borrowers but can be as low as 1% with subsidies. Repayment periods can also last to a total of 38 years, which is beyond the standard 30-year mortgage term. For these direct loans, you may be required to undergo education in homeownership and be charged a fee for this education.

3. Home Improvement Loans or Grants

USDA home improvement loans or grants allow homeowners to repair or upgrade their rural home. This also includes modernizing or repairing the home to remove safety and health hazards. Alone, loans can provide up to $20,000 of financing. For eligible seniors who may be able to combine a loan with grants, the USDA can provide financing of up to $27,500. The interest rates for repair loans are 1%. Income limits vary by region and household size, so you should consult the USDA eligibility page to figure out your local limit.

What Is the Application Process for a USDA Loan?

application process for a usda loan

Fortunately, the USDA rural loan is meant to be as affordable and accessible as possible, and so is our application process. Applying for a mortgage with us at Assurance Financial takes just a few minutes. You can progress quickly through our online application and discover the options that are available for you.

We understand that applying for a mortgage can seem like an overwhelming process, especially if it’s your first time in the market or if you’ve been rejected for a mortgage loan before. That’s why USDA rural loans can be an excellent financing option since they tend to be easier to qualify for.

1. Get Prequalified

With Assurance Financial, you can get prequalified by providing your credit score and other financial details. You can get a free, no-obligation quote within 15 minutes by starting online or by speaking to a loan officer.

2. Fill out Your Application

with assurance financial, you can complete your application online

After you find a property you like, you fill out your complete application. With Assurance Financial, you can complete your application online. We perform the rest of the process in-house — we never outsource underwriting.

To fill out your application, here is some of the financial information that you’ll need:

Assets: You no longer have to fax bank statements to give us information on your assets. With our integrated system, you can simply log in to your bank accounts.
Tax returns: Copies of your federal tax returns from the past two years may be requested. If you use TurboTax, you can simply log in using our system and complete this step quickly.
Credit score: Your credit score can determine whether you qualify for a mortgage and what the terms of your mortgage will be, so your payment history, debt and other types of credit may all be taken into account during your application process.
Proof of income: If your employer uses a well-known payroll company such as ADP, you just need to use your payroll login to prove your income.
Proof of identification: Snap a photo of your government-issued photo ID to prove your identity and upload it to your application. Yep, it’s that simple.

3. Processing the Application

Processing your application includes underwriting and appraising. After processing is complete, we decide whether you are approved for a loan.

4. Funding Your Mortgage

if we determine you are eligible and we can fund your loan, the next step is signing with a notary

If we determine that you are eligible for a mortgage loan, and we can fund your loan, the next phase is signing with a notary, funding the loan and closing the mortgage. At closing, you’ll sign all necessary paperwork, such as the documents for your loan. After the paperwork is back to us, the check will be delivered to the home’s seller. Finally, you’ll be able to pack your bags and move into your home!

At Assurance Financial, we want to help you secure the right mortgage for the house of your dreams. We’re here to answer any of your questions and help you understand everything you need to know for applying for your loan.

Whether you’re looking to buy a farm or a home or to build or renovate your property, we have the loans and resources to help.

What Areas Qualify for a USDA Loan?

If you’re unsure if you live in an eligible area, the USDA has a map with the areas on them. You can access the USDA’s Income and Property Eligibility site to determine whether your property may be eligible. First, choose the program that interests you.

Next, search the address of your home to check whether the property is located in an eligible area. The process is similar for determining income eligibility.

You can also check the limit that applies to the county where your home will be located. Simply click on the state you are or will be living in to find your county’s loan limit.

If you’re interested in securing a USDA rural loan as an option for financing your home, be sure to first check that the property is eligible for the loan via the USDA’s eligibility pages. You can also reach out to us at Assurance Financial to find out more information about the USDA rural loan requirements in your region.

Apply for Your USDA Loan With Assurance Financial

find a loan officer to apply today

USDA Rural loans are perfect for homeowners or buyers in many ways. Rural and some suburban homeowners who may not qualify for a conventional mortgage loan may be able to finance their dream home with a USDA rural loan.

The trick is knowing if your current or future home is in the eligible area. Luckily you have us. At Assurance Financial, we will answer all your questions and make sure you have everything you need. We want to ensure you get the USDA loan you need with the terms that work for you.

Why should you finance your home with Assurance Financial? We have an average 4.98 star-rating across thousands of reviews for a few reasons:

We offer outstanding customer service. We’re here to help, and our glowing reviews illustrate how much we care and the value we put into our clients’ satisfaction with their lending experience.
We offer a comprehensive approach to financing. With Assurance Financial, you won’t have to deal with the hassle of several different contacts. You can complete the entire loan process under our roof.
We offer a large variety of loans. Everyone’s financial and personal situation is different, and at Assurance Financial, we offer options for mortgages that can suit every client we serve.
We offer a simple application process. We offer both a virtual application process and a process with one of our loan officers to make your loan application as smooth and fast as possible.
We are an approved independent lender. We are both Fannie Mae and Freddie Mac seller and servicer approved. We are also Ginnie Mae issuer approved.

As an independent lender, we know homeownership is the dream for just about every one of our clients, and we aim to make that dream a reality. No matter what your life situation is, whether you’re buying your first home, starting a family or enjoying your golden years, we have the mortgage loan solutions for you. We have loan officers across 28 states, so you can search for a local loan officer who knows information relevant to your location and situation.

At Assurance Financial, you can find end-to-end processing for your USDA loan all under one roof so your journey of securing your dream home is easier. Just contact one of our home loan experts and apply online today!

The most common type of home loan is the conventional loan. These types of loans are perfect for borrowers with are perfect for borrowers with a strong credit history and the funds for a more substantial down payment. Conventional loans offer the ability to avoid the costs of mortgage insurance, while also giving borrowers the option of fixed or adjustable rates.

When & How A Conventional Loan Helpful?

When you apply for a home loan, you have several different options to choose from, but the most common are Conventional loans or government insured loans. Conventional loans follow the guidelines of Fannie Mae (the Federal National Mortgage Association or FNMA) or Freddie Mac (The Federal Home Loan Mortgage Corporation, or FHLMC). Conventional loans, unlike government-insured loans, are insured through private companies. The reason most Conventional mortgages are attractive to most borrowers is that they often feature better terms than jumbo or government insured loans. Conventional loans are appealing because they are available in both fixed or adjustable rate options. A “fixed-rate” mortgage refers to an interest rate that won’t change during the life of your loan.

Because of these options, a conventional loan is an excellent choice for people who plan on living in their home for many years and want to know what their monthly payments will be for the duration of their loan. The other side of the coin is adjustable-rate mortgages (ARMs). ARMs offer a lower interest rate for a short term during the first few years of the term—usually from 3 to 10 years, after which the interest rate can change. If you intend to own your home for a brief period, you could save money with an ARM at today’s low rates. If you plan to stay in your home longer, a fixed rate may be your best option.

A convention loan is a mortgage that isn’t received from a government agency. It is the most common type of loan, requiring acceptable credit and a reasonable down payment. Most borrowers find this loan attractive because of its two different rate options and its low-interest rates compared to other government loans such as those given out by the Federal Housing Association and the Department of Veterans Affairs. As a long-term option for most homebuyers, Conventional loans offer fixed and adjustable rate options. Depending on your situation, one may work better than the other. However, a significant draw for most is the option to choose their rate in general.

Four Things to Know About Conventional Loans:

Your debt-to-income ratio – Debt-to-income ratio (DTI) is a proportion that compares your monthly income with your monthly payments on various debts like car loans, student loans, or credit cards. Having a low ratio is attractive to lenders. However, you may be approved with a high DTI if your credit history is excellent and you have sufficient reserves in the bank after closing.
Your credit history – When it comes to credit score, obviously, the higher, the better. In general, a borrower will need a minimum credit score of 660 to be eligible for a conventional loan. This score is considered acceptable, with anything over 700 being considered excellent.
Reserves after closing – The most important part of getting approved for a loan is ensuring the lenders you can pay it back. Lenders want to know that, should you be laid off, you will still have money to draw from to make your monthly payments. If you can prove you can do this, you will become more attractive to lenders.
Fannie Mae and Freddie Mac – These are both federal associations that set guidelines for how loans are financed based on the home and homeowner. Fannie and Freddie have relatively lenient requirements when it comes to traditional single-family homes, but some “unique” property types – “tiny” homes, mobile homes, or homes with unique design/structure – may be harder to finance with a conventional loan.

If you’re interested in getting a conventional loan, contact one of our loan agents today. We will make sure you have everything you need to make the process as seamless as possible!

For most people, buying a home is the most significant purchase they will make in their lifetime. Before you get started on your journey, it is important to understand which mortgage options are out there.

A conventional loan is one of the more popular options, but they come with a few significant requirements. Below we’ve shared a few details about conventional loans that’ll help you understand if they’re right for you.

The Basics of a Conventional Mortgage

The length of most conventional loans is 15, 20, or 30 years. To qualify, you will need a good credit score. The minimum score to be approved can vary from lender to lender, but a score of 620 is usually what you will need to be approved, and a score of 740 will help you secure the best rate possible.

Unlike other loans, a conventional mortgage will require a significant down payment. Most other loans require an initial payment of about 5%, but with a conventional loan you can expect put down up to 20%. The amount varies and depends on your credit history. You will also be responsible for origination fees, appraisal fees, and mortgage insurance.

Loan Limits

There are two types of conventional mortgage loans: conforming and non-conforming.

Conforming loans follow guidelines set by Fannie Mae and Freddie Mac. The rules for these loans are based on the size of the loan. In 2016, home loans for single-family homes were limited to $417,000, while higher-cost areas held limits up to $625,500.

Non-conforming loans are suitable for borrowers who don’t qualify for a conforming loan because the amount is more than what can be backed by Fannie Mae or Freddie Mac. Most lenders charge higher rates for non-conforming loans since they typically carry other fees and insurance requirements.

Is a Conventional Loan Suitable for You?

Conventional loans are a great choice for borrowers with a strong credit history who can afford a down payment of at least ten percent or more. The higher your credit score, the lower your interest rate.

Lenders are also looking for a debt-to-income-ratio that sits around 36%. People with a little more debt than average and a modest credit score may not qualify for a conventional loan. Acquiring a conventional loan is a little more difficult for those with a DTI over 43% and a credit score below 650.

Do You Qualify for a Conventional Loan?

Contact Assurance Financial today to see if a conventional loan is suitable for you. Our team of home loan experts is prepared to address any questions or concerns you have about the loan process.

Click here for more information about conventional loans at Assurance Financial.