Reza Abadi

Steps in completing your home purchase loan

1. Pre-approval - Get pre-approved for a mortgage and know in advance exactly how much house you can afford. Completing this step will also increase your negotiating power since you'll be viewed as a "cash buyer".

2. Loan Search - Put yourself in the hands of an experienced mortgage professional, someone who will help you to determine which financing options best suit your needs today and in the future.

3. Loan Application- It's crucial to supply the lender with as much information as possible, as accurately as possible. All outstanding debts as well as assets and income should be included.

4. Documentation - Paperwork supporting the application must also be submitted. Information commonly sought includes pay stubs, two years' tax returns, and account statements verifying the source of the down payment, funds to close and reserves.

5. The Hunt -Begin shopping for a house. Once you find the right one, the terms of the sale will be negotiated, including the price and potentially the terms of the loan being sought.

6. Appraisal - Lenders require an appraisal on all home sales. By knowing the true value of the home, the borrower is protected from overpaying.

7. Title Search - This is the time when any liens against the property are discovered. A lien may have been placed on a property to ensure payment of outstanding debts by the owner. All liens must be cleared before a transaction can be completed.

8. Termite Inspection - While most purchase loans do not require a formal inspection for termite and water damage, some loans (especially government loans) allow for the possibility. If problems are found, repairs may be necessary.

9. Conditional Approval – Once all of the information compiled has been submitted and reviewed we may have some more documentation to gather from the borrower in order to reach the final approval.

10. Final Approval – Once the investor decides everything needed has been gathered and the borrower still qualifies for the loan, we will reach our final approval.

11. Signing - During this step, final loan and escrow documents are signed.

12. Confirmation of Funding - The lender authorizes the disbursement of loan proceeds.

13. Closing - Documents transferring title will now be officially recorded by the County Recorder.

14. Congratulations, you are now a homeowner!

All you need to know about loans.

FHA Loans:

This is a government loan which has been around fo r years and it has been taking a much bigger portion of market these days.

• 96.5% financing, need only 3.5% down-payment.
• Loan will have 1% up-front MI (Mortgage Insurance) and this can be financed into the loan. So, the total financing would be 97.5%.
• Monthly MI will be charged regardless of amount of down-payment. Here is the break down of Monthly MI.

What is LTV: Loan to value (ratio of purchase price or appraisal value to loan amount)

NOTE: 15 Years FHA Loan with LTV of 78% WILL NOT have monthly MI. ( The only FHA loan without monthly MI).

• Monthly MI will drop when LTV reaches 78% or after 5 years. (whichever comes LATER.)
• FHA will allow gift money as down-payment. This money can be from any close relative.
• FHA Rates are normally better than conventional but have higher MI factors.
• Credit Criteria are usually easier for FHA loans and the lower credit scores will not affect the rates as much.

USDA Loans:

USDA Loans which stands for United States Department of Agriculture are very agressive loans for rural areas. There is a website to determine if the property is in an eligible location. http://eligibility.sc.egov.usda.gov

• 100% financing with no money down is one of the top options USDA offers.
• There is an up-front fee which gets financed to the loan (similar to FHA). The up-front fee for USDA is at 2.00%
• USDA didn'tuse to have any monthly MI which made it one of the best loans in the nation, but as of October 2011 there is .25% monthly MI and this amount will never go away regardless of the equity in property.
• USDA will allow closing cost and fees to be financed to the loan as long as the appraisal value does support the addition.
• There is income eligibility for USDA loans which varies by county and numbers of family members. Refer to the site above for income eligibility.
• USDA's credit criteria are more relaxed compared to conventional loans and they offer aggressive interest rates.

VA Loans:

This loan is for eligible veterans. VA loans are another government loan which offers alot of uniqe benefits.

• 100% financing with no money down.
• Up-front fee for VA varies on the status of veteran, the number of usage of VA loan in past and the purpose of a loan. Typically a first time home buyer using VA will pay 2.15% up front fee which will get financed to the loan.
• If a veteran is disabled and the percentage of disability is within the guidelines they are not required to pay the up-front MI.
• There are NO MONTHLY MI for VA loans, this makes the loan one of the most powerful and beneficial financings in our industry.
• Credit criteria are easier compare to the conventional loans.

Conventional Loans:

This loan is offered by private investors and it's not a government loan. These loans generally have much tougher guidelines and restrictions.

• 95% financing requires minimum of 5% down-payment.
• Interest rates in conventional loans are determined by down-payment, credit scores, debt to income (DTI) and the loan amount.
• There is no up-front MI required for these loans.
• There will be monthly MI if the down-payment is less than 20% but USA Mortgage does offer alternatives for this and we can compare to different options.

MHDC Loans:

First time home buyer program offered by the staes. MHDC is a form of FHA loan which does allow down-payment assistance.

• MHDC will allow borrowers to use 3% down-payment assistance which will bring the financing to 99.5% with only .5% down.
• Unlike USDA, these loans don't have any eligible property locations and any FHA approved property is eligible for this loan.
• There are income limits in this program.
• The program is only for first time home-buyers.
• If the property is only for first time home-buyers.
• If the property is sold or refinanced less than 3 years, the down-payment assistance money needs to be paid back.
• MI options are all similar to FHA loans.

203K or Renovation Loans:

203K loan is a form of FHA financing which provides a unique feature. Allowing for refinance or purchase, this loan has all FHA features plus allowing home buyers and owners to use the future value of home and get money for renovation.

• Minimum loan amount: $50,000 (Including improvements)
• Maximum Loan Amount $271,500 (Including improvements) or FHA Maximum loan amounts by counties.
• Loan Types: 15 years or 30 years fixed purchase or refinance loans.
• house must be currently be (or soon be) owner occupied.
• House must be at least 1 year old.
• Home improvement costs must be completed by approved, licensed and and insured contractors.

Other Loan Options:

Besides all the loans above we do offer a variety of other financing options as well. Below is a lise of some of our unique loans. Please contact USA Mortgage for information on these loans:

• FHA One time close construction loans.
• NO PMI loans with 5% down.
• Manufacture loans (must follow all rules and guidelines.)
• HARP (refinance program for under water loans.)
• Cash-out refinances.

Should I apply for a VA loan?

If you're a Veteran, Active Duty Personnel, Reservists/National Guard member, or possibly a surviving spouse you should consider the VA loan.

How it works. Offers 100% financing. A VA funding fee of 0 to 3.3% (this may be financed) of the loan amount is paid to the VA. When purchasing a home, veterans may borrow up to 100% of the sales price or reasonable value of the home, whichever is less. When refinancing a home, veterans may borrow up to 90% of reasonable value in order to refinance where state law allows.

You will need a certificate of eligibility (COE) before you can get a VA backed loan.

It is generally easier to qualify for a VA loan than conventional loans.

How to get a COE for your lender.

• The COE can be accessed at vip.vba.va.gov at under the WebLGY online database.
• Potential borrower inputs data
• Your COE will be determined in seconds

Is this the right time to refinance my home? There are a lot of different variables involved in financing a propety. Most homeowners focus on interest rates, This is a big mistake as rates aren't the only important part of financing.

Choosing a right program for your home loan is the first and most important part of the process, a knowlegable loan officer will research the available options and would choose the best program for your need and status. Shopping for rate and terms is the next step and you need to make sure to pay attention to fees as much as the rate, as sometimes fees will not be re-couped with your saving.

You can get pre-qualified with us in 24 hours and find out which program is best for you in short term and long term.

Is this the right time to refinance my home? There are a lot of different variables involved in financing a propety. Most homeowners focus on interest rates, This is a big mistake as rates aren't the only important part of financing.

Choosing a right program for your home loan is the first and most important part of the process, a knowlegable loan officer will research the available options and would choose the best program for your need and status. Shopping for rate and terms is the next step and you need to make sure to pay attention to fees as much as the rate, as sometimes fees will not be re-couped with your saving.

You can get pre-qualified with us in 24 hours and find out which program is best for you in short term and long term.