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What are Conventional Loans?
Conventional Loans are mortgage loans that are not insured by the government (like FHA, VA, USDA Loans), but they typically meet the lending guidelines that have been set by Fannie Mae or Freddie Mac. Typically, conventional loans have better rates, terms and/or lower fees than other types of loans. However, conventional loans typically require a borrower to have good-to-excellent credit, reasonable amounts of monthly debt obligations, a down payment of 5-20% and reliable monthly income. Conventional loans are ideal for borrowers with excellent credit and at least a 5% down payment.

Most Common Types of Conventional Loans
Fixed Rate Mortgages: Your rate and payment never change.
30 Year Fixed Loan
Benefits: Lowest fixed monthly payments

20 Year Fixed Loan
Benefits: Low fixed monthly payments

15 Year Fixed Loan
Benefits: Lower rate than the 30 or 20 Year Fixed Loans; Pay less interest and pay your home off more quickly.

10 Year Fixed Loan
Benefits: Lower rate; Pay off your loan and build equity faster.

5 Year Fixed Loan
Benefits: Lowest rate; Pay off your loan and build equity the fastest
Adjustable Rate Mortgages: After the initial period your interest rate can change once a year.

3/1 ARM
Fixed Rate for 3 Years, Adjustable Rate for the remaining 27 years

5/1 ARM
Fixed Rate for 5 Years, Adjustable Rate for the remaining 25 years

7/1 ARM
Fixed Rate for 7 Years, Adjustable Rate for the remaining 23 years

What are the Conventional Down Payment Requirements?
For Purchase transactions Conventional Loans require the home-buyer to put down at least 5% - 20% of the purchase price of the home. For a Refinance transaction, most lenders require at least 10% equity in the property.

What types of property are eligible?
Most conventional loan programs allow you to purchase single-family homes, warrantable condos, planned unit developments, and 1-4 family residences. A conventional loan can also be used to finance a primary residence, second home and investment property.

It's easy to understand why many people looking for a new home are turning to FHA insured loan programs. Because FHA Loans are insured by the Federal Housing Administration homebuyers have an easier time qualifying for a mortgage. Those who typically benefit most by an FHA loan are first-time home buyers and those who have less than perfect credit.

As FHA Loan specialists we can help you understand any new changes to the FHA loan program. We're here to create a customized solution that works best for you and your family.

How FHA Loans Work
At Parlar Home Loans Co., we want to help you understand how a FHA mortgage loan works. In all actuality the Federal Housing Administration (FHA) doesn’t loan any money, they insure it. This means that you’re considered to be a less risky borrower than someone who might not have the backing of the federal government. Our role is to make sure that you qualify for an FHA mortgage and structure our loan to reflect it.

The other pages in the FHA loan center can help you understand more about this unique program. Whether you are trying to determine if you qualify or if you are interested in finding out what kind of documentation you’ll need to ultimately get your loan, our site can provide you the information you are seeking.

An important resource for considering a FHA loan is the official Housing and Urban Development website. There you can find even more answers to questions and learn more about insuring your loan through the Federal Housing Administration.

FHA Loan Benefits
FHA insured mortgages are some of the best kinds of mortgages available. This is because they can help more people into the home buying market. Check out the list below to understand some of the most basic benefits of an FHA mortgage.

Easier to Qualify for – because they’re backed by the federal government lenders are more likely to give you the kind of loan that you need.

Low Down Payment – FHA insured mortgages only require a 3.5% down-payment which makes it easier for people to own homes. Additionally the 3.5% can come in the form of gifts, unlike many other loan programs.

Lower Credit Borrowers Qualify – because FHA insured loans are backed by the government those with a poor credit history have an easier time getting this kind of loan.

Better Interest Rates – with the backing of the government these loans typically have a better interest rate than most traditional mortgage loans.

Better Home Stability – the FHA has programs designed to help homeowners keep their homes during hard times. The will work with you to help your home from falling into foreclosure. Always try to work out problems with your lender before the situation becomes dire.

FHA Loan Checklist
When you're applying for an FHA loan the following list of documents will help expedite the process. We can help you understand any part of the FHA loan process so don't hesitate to contact us with any questions.

Employment Info
Past two years completed tax returns.
Past two years W-2's, 1099's and any other necessary tax forms.
One month worth of newest pay stubs.
Self-employed will need three years tax returns and YTD Profit & Loss Statement.
Savings Info
Past three months full bank statements for all accounts.
Any recent statements from investment accounts (retirement, 410k, mutual funds, etc.).
Personal Info
Driver's License or other official State identification.
Social Security Card.
Any Divorce, Palimony, Alimony Documents.
Green card or work-permit (if applicable).

FHA Loan Common Questions
Check out our list of common questions related to FHA mortgages. Check out our list of common questions related to FHA mortgages.

What is the FHA?
FHA stands for the Federal Housing Administration. It was created in 1934 to help Americans get into homes.

What makes a FHA insured mortgage beneficial?
A FHA insured mortgage is easy to qualify for, can be obtained with less than perfect credit, costs less and requires a smaller down-payment.

Where can I find FHA forms and other literature?
A great source for FHA forms and information is https://www.hud.gov/topics/buying_a_home.

What is the FHA loan limit in my area?
The loan limit across the country is different. Click here to see limits in your area.

Can I pay an FHA loan off early?
Yes, however be sure to check the pre-payment section of your contract before signing.

Can a FHA insured loan help me lower energy costs?
Yes, through the Energy Efficient Mortgages Program you can finance 100 percent of the cost of making your home more energy efficient. Contact us to see how.

Is there a FHA program to help me refinance my loan?
Yes, the recently created FHASecure is one of the ways that we can help you refinance your current home loan. Contact us now to see what we can do for you.

Can I refinance a fixed rate FHA loan?
Yes. Talk with one of our professionals today to see if refinancing makes sense for you.

What is the recommended debt-to-income ratio for FHA loans?
The recommended debt-to-income ratio for a FHA loan is 30%.

Are FHA loans assumable?
Absolutely, you can assume an existing FHA loan or allow a buyer to assume yours.

Will I have to pay mortgage insurance with an FHA loan?
Yes, in fact FHA mortgages often require you to carry mortgage insurance for longer than most conventional loans.

Can I get a "fixer-upper" of a home with a FHA mortgage?
Yes, however you might be required to fix certain problems in the home before you can get the full loan. Speak with us today for details on this.

FHA Qualifications
In order to qualify for an FHA loan, a borrower typically needs to meet this criteria:

Proven employment status of at least 2 years.

Steady or increasing income over a 2 year period.

History of on-time payment. No more than two missed payments on your credit.

If you've filed for bankruptcy you must wait at least 2 years and have good credit since you filed.

Those with foreclosures must wait at least 3 years since the most recent foreclosure.

Monthly mortgage payment should be roughly 30% of your gross income.

You must pay a minimum of a 3.5% down-payment.

Agree to 2.25% in closing costs

Only certain properties are eligible - single-family homes, condominiums, double-wide manufactured homes, modular homes and 2-4 unit properties.

The property must be your primary residence.

FHA Streamline Refinance

What Is An FHA Streamline Refinance?
If you already have an FHA mortgage then you might qualify for a FHA Streamline Refinance. An FHA Streamline Refinance is a great way for a borrower with an existing FHA backed mortgage to reduce their interest rate, reduce their payment or possibly both.

Here are some really cool facts about an FHA Streamline Refinance:
No Appraisal is Required – because your loan is already guaranteed by your existing FHA loan, the FHA will allow you to use your home’s original purchase price as your home’s current value.

You can still refinance even if you are underwater – even if you owe more than your home is worth, you might still be able to get an FHA Streamline Refinance loan.
There is no FHA prepayment penalty to worry about.

FHA Streamline refinance rates are the same as “regular” FHA loan rates.

Employment verification is not required with an FHA Streamline Refinance – in other words, no paystubs, no W-2s or tax returns are required for approval.

Income verification is not required with an FHA Streamline Refinance
Credit score verification is not required with an FHA Streamline Refinance – instead of checking your credit, your payment history is used to determine fi you qualify or not. You must have no late payments in the last 90 days and only one or less late payment within the last 12 months.

The Refinance Must Have A "Purpose"
Streamline Refinance applicants must demonstrate that there's a Net Tangible Benefit in the refinance or in other words a legitimate reason for refinancing. For Example:

Refinancing from an Adjustable Rate Mortgage to a Fixed Rate Loan or Reducing your principal + interest + mortgage insurance 5 percent or more.

Your Loan Balance May Not Increase To Cover The New Loan Costs

The FHA prohibits increasing a Streamline Refinance's loan balance to cover associated loan charges.

The new loan balance may increase but only by the cost of the Upfront Mortgage Insurance Premium. All other costs -- origination charges, title charges, escrow -- must either be paid by the borrower as cash at closing, or credited by the loan officer in full.

WHAT IS A NON-QM LOAN?

Many homebuyers do not have the standard or consistent forms of income that are typically required by mortgage lenders. Yet, while they may not be able to qualify for conventional loans for various reasons, these buyers may still have enough income or assets to afford homeownership. In these situations, a non-qualified mortgage (non-QM) may be the solution.

In order reduce risk of loss after the mortgage meltdown in 2008, federal regulators tightened borrower requirements on mortgage loans that could be backed and bought by government agencies. Loans that meet all the new criteria are called “qualified mortgages.” Any loan that falls outside of those qualifications is called a “non-qualified mortgage” or non-QM.

A non-QM is a mortgage loan that uses alternate methods to verify income to qualify borrowers. Even though these loans do not meet the standard requirements, they are not necessarily riskier loans. All borrowers are still required to prove their ability to repay the loan. Because there is more work required to process non-QM loans, the interest rates tend to be anywhere from 0.5% to 5% higher, depending on the loan terms.

Who Do Non-QM Loans Help?

Non-QM loans are often a good fit for those who have unique income situations:

Self-employed borrowers

Self-employed individuals often have irregular income that may come from several sources. They can often qualify for a non-QM loan using bank statements rather than tax returns.

Borrowers with considerable assets

Some buyers who can buy a home with cash prefer to take out a non-QM loan to finance their purchase in order to maintain a positive cash flow.

Real estate investors

Those who buy homes expressly to flip them for profit or turn them into rental properties often use non-QM loans. This is because of the quick turnaround or because the qualifying income will come from the projected rent.

Foreign buyers

Borrowers from other countries may not have a U.S. credit score to help them qualify for a traditional loan. As long as these foreign buyers have high income, substantial assets and down payments, they can usually obtain a non-QM loan.

Buyers with blemished credit histories

Non-QM loans can also be helpful for those with sufficient income but credit issues like prior bankruptcy, foreclosures or not enough credit history.

What are the Benefits of Non-QM Loans?

The benefits of Non-QM loans include the following:

They provide mortgage funding for those with non-traditional income or financial situations.

They allow for loans up to $2.5 million.

Fixed-rate and adjustable-rate non-QM mortgages are available.

Non-QM loans close just as quickly as conventional mortgages.

They can be made to legal entities, like family trusts, instead of just individuals.

No mortgage insurance is required on non-QM loans.

They can be used to free up cash for investments.

Non-QM cash-out refinance loans allow borrowers to take as much as $500,000 out in equity, depending on the situation.

What Documentation is Required for Non-QM Loans?

The documents required will vary greatly based on the financial situation of the applicant. In order to verify income, you can provide either personal and business tax returns or bank statements or investment account statements. In some cases, income verification is not even necessary. Credit scores and debt-to-income ratios will be factored in. Non-QM loans take a more holistic approach to an applicant’s financial situation though, rather than relying on a standard underwriting matrix.

What Types of Non-QM Loans Are Available?

Non-QM loans employ non-standard mortgage terms in order to help borrowers qualify. These include loan terms longer than 30 years, interest-only loans, higher debt ratios or alternate income verification methods. Non-QM loans can be used for primary residence mortgages, refinance loans, cash-out refinances, and investment property loans.

REFINANCE LOANS

Refinancing a home mortgage can be a big decision for many homeowners. Your situation and needs change over time so why shouldn’t your mortgage? Now might be the right time for you to refinance into a lower rate mortgage.

You should take the time to consider the following questions to see if refinancing makes sense for you.

Are you tired of your adjustable-rate that never seems to stop adjusting?

Is Private Mortgage Insurance (PMI) getting you down when it doesn’t need to?

Has the time come to save more money every month?

Are mortgage rates currently lower than what your rate is?

Will other financial opportunities present themselves as you refinance?

Refinancing is an easy way to solve many of your mortgage worries. Getting a lower monthly rate and paying less over the life of your loan just makes sense. At Parlar Home Loans Co., we’re ready to find the right refinancing solution for you. Parlar Home Loans Company can help you evaluate your mortgage needs and draft a refinancing plan that will save you money.

Be sure to check out our mortgage refinance center to get the information you need so you can make a sound decision for you and your family.

Common Refinance Questions

Determining if a home refinance loan is right can be confusing. That's why we've put together a list of common questions that homeowners have when considering refinancing.

What is Refinancing?
Refinancing is simply getting one loan to pay off another.

What does refinancing cost?
Typically, the closing cost of a refinance is between 1% & 2% of the loan amount, lender fees included. You may choose to pay points (see below) to lower your interest rate, or you could want to do a Low- or No-cost refinance.

What are points?
Points (or discount points) are a way of lowering your interest rate. By paying 1% of the total loan amount up-front, a borrower can lower his interest rate by about 1/8%.

How does the APR differ from the interest rate?
The rate refers to what percentage of your loan you will pay in interest per month, whereas the annual percentage rate (APR) is an adjusted percentage that expresses the yearly cost and also includes certain charges and fees.

What are FRM & ARM?
The interest rate of a Fixed-rate Mortgage (FRM) will not change for the life of the loan. Alternatively, an Adjustable-rate Mortgage (ARM) will be subject to periodical interest rate adjustments based on interest rates around the country.

Should I modify my loan or apply for a refinance?
It depends. When you refinance, you may be able to get lower interest rates, but there are additional costs. On the other hand, a loan modification usually means extending the term of the loan and increasing the interest rate, but adding no other fees.

What’s the 2% rule? Is it useful?
The 2% rule states that you should aim for a 2% lower interest rate in order to ensure that the savings generated by your new loan will off-set the cost of refinancing, provided you’ve lived in your home for 2 years and plan to stay for at least 2 more.

While this rule is useful as a point of reference, it shouldn’t be adhered to strictly. If you think you will stay in your home for 5 or more years, for example even a 1% interest rate reduction will pay off for you. Additionally, with low- and no-cost refinancing options available, the cost of refinancing can be recovered much more quickly.

What is PMI?
PMI stands for Private Mortgage Insurance. Borrowers with less than a 20 percent down payment are required to carry this insurance as a means of protecting the lender against default.

Will I need to get an appraisal when I refinance?
Yes.

Does bad credit exclude me from a refinance loan?
Not exactly. When considering a refinance loan it's important to remember that the better your credit score the better interest rate you can get. So if you don't have perfect credit you can still qualify for a refinance loan but you'll want to make sure that you're lowering the interest rate on your loan enough to make a refinance worth it.

Do I need to have equity in my home to refinance?
Yes. The general rule is that you need to have 90% loan-to-value ratio before you can refinance. This means that your home is worth about 10% more than the loan that is current on the house. Additionally, your home will need to have increased in value since you purchased it.

Can I get cash from a refinance loan?
Yes. Depending on the type of refinance loan you opt for you can take out cash to use for bills, home repairs or whatever you might need it for.

Can I "lock-in" an interest rate on a refinance loan?
Yes. Now is the time to refinance because interest rates are so low.

How long does it take to go through the refinance process?
A typically refinance usually takes between 2 and 4 weeks. Getting your home appraised is usually where most hang-ups occur so if you can schedule a home appraisal right away than getting a refinance loan is usually very quick.

How You Can Benefit from a Refinance
There are many refinancing options available, and the benefits of each are unique. Whether you’re looking to reduce your payments or consolidate your debt, we can help. Call or come in today to get your process moving.

Lowering your Monthly Payment
There are a few ways to lower your monthly payment, including obtaining a lower interest rate or extending the term of your loan. This is usually the primary reason for obtaining a refinance loan. Whether you're looking to switch from a variable rate to a fixed rate loan or looking to pay less per month a refinance loan can help provide more stability and smaller payments.

Cashing-out Equity
Many people would like to take advantage of the equity they have built up in their homes. When refinancing, it is possible to accomplish that while still reducing your monthly payments. Accessing the equity in your home is a great way to make some improvements in your life whether that be paying for college, renovating or remodeling your home or even starting a business. For most people their homes are their greatest sources of wealth, so using that to its full advantage can make a big difference.

Consolidating Debt
Refinancing can be useful in keeping your debt manageable by replacing a number of high-interest loans (such as credit card debt) with a single, lower-interest loan. You can take the cash that you gain from taping the equity in your house and paying off any kind of debt that you might have. Most people will try to pay off high-interest, non-deductible forms of debt such as credit cards or auto loans.

Dropping Private Mortgage Insurance
Depending on how much equity you have in your home you can refinance your home loan and possibly drop your private mortgage insurance. This can mean a lower overall monthly payment on your mortgage.

Buy Down your Rate
By paying points up-front, you can reduce your interest rate. This may or may not be a good option for you. Those who see benefits from paying points up-front are those who plan on being in their homes for a while. A lower interest rate means a lower monthly payment. The longer you pay the lower monthly payment the more sense it makes to pay points up front.

Low-cost Refinancing
This option can eliminate some or all of the fees associated with refinancing, but also carries a higher interest rate than a standard refinance. It's important to take all aspects of a new loan into consideration before refinancing. Our refinance professionals are ready to help you make the right decision. Let us help you determine of low-cost refinancing is a good fit for you.

Refinance Checklist
When you refinance, certain documents and information will help the process move forward more quickly. Below are listed some of the more common documents needed to refinance. The more information you have on-hand, the faster your refinancing will go.

You are likely to need:

Employment Information
Most recent month’s pay stubs (originals)
W-2 forms—past 2 years’ (copies)
Income tax return information, especially if self-employed—past 2 years’ (copies)
Assets & Obligations Information
Checking, savings, or stock accounts; 401K information; etc. (copies)
Current credit score and reports
Debt data such as credit card or current mortgage information
Insurance Information
Homeowners insurance (copy, especially of the declarations page)
Proof of title insurance

What You Need to Know about Refinancing
People refinance for a number of reasons. You may like to consolidate first and second mortgages, get a lower interest rate, or lower your monthly payment. Perhaps you want to switch from an Adjustable to a Fixed-rate Mortgage, or to stop paying Private Mortgage Insurance (PMI). Maybe you're just looking to cash out some of your equity for home renovations. Refinancing allows you to redefine your mortgage loan to better fit your current needs.

However, there are many things to consider before deciding to refinance your mortgage. With so many options it's important to refinance the right way. At Parlar Home Loans Co. we’re happy to show you all of your options so you can make the best decision on a refinance loan. If you would like to find out if a refinance is right for you then give us a call today at (310) 409-3649

Interested in Refinancing? Consider this…

Are you planning on moving soon or are you in it for the long-haul?
If you're planning on sticking in your home for more than two years then a refinance mortgage is a great option. Because a refinance loan does require closing costs homeowners who plan to stay in their home for more than two years will usually; make up for those costs with lower monthly payments. If you're looking to move within the next two years then a refinance might be a good idea depending on how far your rate drops.

Do you need to tap into the equity of your home?
For most people a home is their most important and substantial investment. History proves that home values increase over the long-run. If your home is now worth more than it was when you purchased it you can use a refinance loan to access that extra value and turn it into cash to pay for unexpected bills, college or to start a business.

Is it time to grow your home?
As families grow, homes can feel smaller. Refinancing your mortgage is a great way to grow money for a home improvement project. The most attractive part of this is that a home remodel can increase the value of your home. This type of refinance can really pay for itself in the end.

Are the terms of your mortgage outdated?
It's likely that your situation in life is not exactly what it was when you first closed on your home. If that's the case then maybe your mortgage terms need a little updating too. Refinancing is a great way to switch from an adjustable to a fixed rate loan or to get into a 15 year loan as opposed to a 30 year.

VA LOANS
A VA loan is a mortgage loan guaranteed by the U.S. Department of Veteran Affairs (VA) that is available to most US service members. It offers some very great benefits to those that have served our country.

You can buy a home with no money down.

You can refinance your home up to 100% of the value of your home.

You never have to pay PMI (Private Mortgage Insurance).

Sellers can pay your closing costs.

They are usually easier to get because the Government insures the loan so that there is much less risk to the lender.

If you already have a VA Loan you might be eligible for a VA Streamline Refinance.

Disabled Veterans may qualify for a waiver of the Funding Fee if they receive any disability payments from the VA or if they are considered to be at least 10% disabled.

Who is eligible for a VA Loan?
As a rule of thumb, almost all active duty or honorably discharged service members are eligible for a VA loan.

You may be eligible for a VA loan if any one of these statements describes you:

I served 181 days during peacetime. (Active Duty)
I served 90 days during wartime. (Active Duty)
I served 6 years in the Reserves or National Guard.
I am the spouse of service member who was killed in the line of duty.
I currently receive disability payments from the VA.
What is the VA Funding Fee and is it required?
Yes, it is required. It is a fee paid directly to the Department of Veteran's Affairs so that they can guarantee your loan and provide you with the opportunity to receive a loan with little to no money out of pocket.

How much is the VA Funding Fee?
It depends on several factors including: Whether you are Active Duty, Retired, Guard or Reserve and whether you this is a first time use, subsequent use, or a cash-out refinance as well as how much of a down payment you are putting down. The fee can range from as little as 1.25% up to 3.3% of the loan. Generally, the more money you put down the lower the VA funding fee. Please contact us and we will help you to determine how what the exact cost of the VA Funding Fee would be for your particular situation.

Do I have to pay the VA Funding Fee out of pocket?
No, you can include the VA Funding Fee in your loan and pay the funding fee over the course of your loan.

Do I still have to pay other normal closing costs like Appraisal, Title and Escrows?
Yes, however with a VA loan if you are purchasing a new home the seller can pay for all or part of your closing costs.

What is a VA Streamline Refinance?
A VA Streamline Refinance is a refinance option that is available if you already have a VA mortgage and you want to lower your interest rate with little or no out-of-pocket closing costs. You don't have provide bank statements, W2s, job verification or paychecks.

These materials are not from HUD, VA, or FHA and were not approved by HUD or any other government agency.

Don't pass up the chance to improve your mortgage situation today by calling mortgage broker Wolf Parlar at (310) 409-3649 to see if refinancing is the right for you.

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