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What You Need to Know About FHA Loans

What You Need to Know About FHA LoansIf you are looking to buy a home soon, there is a bunch of information you need to make yourself aware of. One option you have is through an FHA loan. If you think that’s an option for you, you need to get yourself updated with the process of getting an FHA loan, including requirements, rules, and regulations established by the FHA. Knowing these details will make it a bit easier for you to qualify for an FHA loan.

FHA Loans Requirements and Documents

First up in the entire process is making sure you’ve got all your requirements ready. Check all requirements one by one and make sure you have everything. Also make sure your documents are the most recent versions. You don’t want to be held up because of an outdated document. One important detail to bring is your latest address and proof of it. Another is your employment or business information. All of these need to be presented. Next is a list of open loans you currently have. Do not forget your bank account details as well, and with it your list of assets and your tax documents. For veterans, certificate of eligibility is required along with the DD Form 214. This form is commonly known as the discharge papers. Again, this document is required.

For an FHA home loan approval, you need to have at least two years of steady income or employment. The mortgage payment approved will be 30% of your income or less. Your financial payments will be verified and it should only be 41% or less. Financial payments include but are not limited to home or real estate, car loan payments, credit card payments, and more. One federally-backed loan is permitted at a time.


Moreover, with any FHA loans, in cases where the borrower/applicant have gone through bankruptcy, the bankruptcy must be as old as two years or more, with proof if good to outstanding credit after the bankruptcy. This rule applies with foreclosures as well, but instead of two years, it becomes three.


FHA loans are hugely popular because of the number of benefits it presents. First is that this loan usually have low down payment requirements. In most cases, it’s usually around 3% of the loan amount. In some cases, it is even lesser than that. Another handy benefit is the interest rate, which is almost all the time lower than any other conventional loans. The third FHA loan benefit worthy to be mentioned is the credit rating standard. Additionally, it does not require perfect credit ratings. This is the reason why most first-time home owners and borrowers go for FHA loans.

The information shared here are the basic ones. If you are looking to apply for one, it is still advisable to get advice and guidance from FHA approved lenders. They are the most equipped and knowledgeable to give you all the details and options you need. Bear in mind that FHA loans are not the same with every lender, so take time to look at a few options before deciding.

Do You Need a VA Loan Specialist?

Do You Need a VA Loan Specialist?

Purchasing a home is a huge transaction and not one you want to enter into lightly. It can also be an exciting adventure particularly if it’s your first home purchase.

The excitement can quickly fall to the wayside, however, if you’re unfamiliar with the process and find yourself in over your head. Using a loan specialist can make all the difference.

Learn what a loan specialist can do for you and why it may be beneficial to have one when obtaining a mortgage.

What is a Home Loan Specialist?

A home loan specialist is a professional trained in the areas of finance, business and loans.

When you apply for a mortgage, you may find that there is a lot more to the process than you’d anticipated.

Depending on the lender, it can be a simple process, but are you getting the best deal possible?

A loan specialist can not only help get you through the process, but they can help you choose the loan that’s best for you and/or your family.

What many don’t realize is that there are different types of mortgage loans.

FHA Loans – FHA loans are loans that are backed by the Federal Housing Administration.

They do require that you purchase mortgage insurance, but also offer benefits. They typically offer lower interest rates and are available to borrowers with less-than-perfect credit scores.

FHA loans also require only a 3.5 percent down payment. They are an excellent option if you’re a first-time home buyer.

VA Loans – VA loans are mortgage loans available to veterans and their spouses.

They are backed by the Department of Veterans Affairs, so they are also attractive to potential homebuyers or homeowners interested in refinancing their current mortgage loans.

They’re also available to consumers with less-than-perfect credit. The best features of VA loans are that they do not require mortgage insurance and typically don’t require a down payment.

Conventional Loans – Conventional loans are mortgage loans you get through lending institutions like banks, savings and loan, credit unions and private lenders.

They may or may not require mortgage insurance depending if you have at least 20 percent down payment.

Credit scores, home values, down payments and debt-to-income ratios usually determine interest rates.

While conventional loans may appear to be the most unattractive of the three types, there are times they’re the best option. Here again is where a loan specialist can be of great service.

What a Loan Specialist Does for You

Since you’ll probably be making payments on your mortgage for anywhere from 10-30 years, you want to make sure you’re getting the best and most affordable loan.

A loan specialist will assist you with the following.

  • Completing and submitting your documentation
  • Going over the lending process with you
  • Helping you choose the right lender
  • Explaining loan terminology
  • Explaining the different types of mortgage loans
  • Helping you choose the right loan type
  • Assisting you throughout the entire process from the beginning and through the closing
  • Having a loan specialist working with you can make the difference of a complicated or easy transaction.

It can also leave you with the confidence that you got the best deal and are armed with the information you need regarding your mortgage loan.

How a Renovation Loan for Home Improvement Works

How a Renovation Loan for Home Improvement WorksIf you want to make the move to a new home, you will first have to sell your existing property. You will naturally want to get as high an amount as possible from the sale of your home.

One of the best ways to add a significant amount to the resale value of your home is to take out a renovation loan.

How a Renovation Loan Differs from Other Types of Loans

There are several ways that a renovation loan differs from other types of loans.

The chief difference is that most mortgage loans will offer you a financing arrangement that will enable you to borrow a fixed amount of money that is based on the price you paid for the property.

Some loan arrangements will go a bit further by allowing you to borrow money based on the actual current market value of your property.

A renovation loan is superior to these other forms of loans in that it will allow you to borrow money based on the projected value of your home after you have completed the proposed improvements. This naturally gives you a higher figure to borrow money based on.

How Does This Type of Loan Usually Work?

In most cases, a renovation loan works similarly to other types of loan arrangement. The process normally begins with a single loan, followed by a single closing at the time the loan is paid off in full.

The lender will advance funds to the contractor that you hire for the work. The money will be delivered in installments as each stage of the work is completed.

Purchase Renovation Loan

There are two very common varieties of renovation loan. The first is known is a purchase renovation loan.

This type of loan is perfect for people who wish to begin the work after closing on the purchase of the property in question.

The loan can be provided for both the purchase of the property and the work that will immediately begin on it.

A minimum down payment for a purchase renovation loan will usually be about 3 to 5 percent of the projected value of the home once the improvements have been made.

Refinance Renovation Loan

The second major type of renovation loan is known as a refinance renovation loan. It can also be referred to in some cases as a rehab loan. This type of loan is very similar to a purchase renovation loan, with some slight differences.

This loan is the perfect type of loan arrangement for people who already own the property that they desire to renovate in order to increase the value of.

Under the terms of this loan arrangement, any prior financing that exists on the property an be paid off while additional funds for the work are provided.

Depending on what type of renovations you qualify for, you can borrow up to 100 percent of the value of your home once the work has been completed.

How Do You Apply for a Renovation Loan?

We can help you with that! There are many different agencies that you may apply to in order to receive a this type of loan. Fannie Mae and the FHA both offer excellent refinance renovation loan programs. Contact us for more details.