When you are on the market for a loan, it is important to consider your options. When you choose Starboard Financial, we work with home buyers to get the most out of our mortgage products. Homebuyers get a mortgage loan officer to work with, and a real estate agent if they don’t already have one, to help them deduce which type of loan is the best fit. Our Starboard Financial mortgage loan officers will make sure all of your needs and questions are met, and they will help you with the loan process every step of the way.
Conventional Loans are classified as conforming or non-conforming. Conforming simply means that the loan meets Fannie Mae and Freddie Mac’s established underwriting guidelines. If a mortgage loan does not fall within these guidelines, it is considered a non-conforming loan.
The main factor that determines whether a loan is conforming eligible is the loan amount. The maximum conforming loan amount is $453,100 in most states. Mortgages with loan amounts above this limit are considered Jumbo mortgages. Jumbo loans are still offered through Fannie Mae and Freddie Mac, but they are treated with different underwriting guidelines than conventional mortgages. Higher interest rates are common for non-conforming Jumbo loans because they carry higher risks.
Fixed or adjustable-rate mortgage (ARM) structures are available for Conventional loans. Fixed rate mortgages maintain the same rate and payment, subject to temporary mortgage insurance if applicable, throughout the life of the loan. The most common fixed-rate mortgages typically carry 15- or 30- year repayment terms. An ARM maintains the starting interest rate for a portion of the repayment term and then adjusts based on interest rate market conditions subject to the option selected.
Conventional mortgages require a minimum 5% down payment in most cases, whereas government loan types require a minimum 3.5% down payment or less. You will also be required to include monthly PMI in your payment if you put less than 20% down on your loan. PMI stands for Private Mortgage Insurance and in short, PMI protects your lender against a complete loss of money if you default on your mortgage payments.
An FHA mortgage is fully insured by the Federal Housing Administration under the U.S. Department of Housing and Urban Development (HUD). The main initiative of an FHA government loan is to lower the barrier to entry of home ownership by decreasing up-front financing costs. Approved FHA lenders, such as Starboard Financial, are able to offer lower down payments for these loans because there is less risk due to the government insurance.
Credit qualification guidelines are often easier than other underwriting standards to allow more people access to the program. This benefit does not come without limitations, as availability is subject to income and primary residency restrictions. FHA loan amounts are subject to ceilings as well. FHA loans are eligible for both refinance and purchase transactions.
One of the main initiatives of the USDA Rural Housing and Development program is to provide loan options in areas where mortgage lending is scarce.
USDA loans are guaranteed by the United State Department of Agriculture, so lower and moderate income earners, Native American tribal governments, the elderly, and people with disabilities can maintain financing options in their communities. The USDA and their partners work with many other federal initiatives to provide housing and employment to rural communities as well.
Borrowers of USDA loans are eligible to contribute as little as $0 for their down payment. Asset reserve requirements tend to be less strict than conventional loan standards. Annual household income limits apply based on the USDA regional charts. You can view the income and property requirements here:
Refinances are undertaken by borrowers to take advantage of market conditions, adjust their monthly budget, limit their exposure during financial difficulty, simplify debt management, or gain a tax advantage in certain situations.
Cash-out refinances may not help lower your monthly mortgage payment or shorten your mortgage term, but additional cash is a useful resource. The equity (ownership) home buyers have established with their previous down payment and monthly mortgage payments can be retracted out of your home as currency for expenses. Many borrowers pull equity for home improvement, alleviating credit card debt and other debt consolidation. A cash-out refinance allows borrowers to see market value appreciation before the property is the sold. In some cases, when combined with a second mortgage, home buyers can refinance into a loan amount above traditional standards and keep the cash proceeds.
Starboard Financial holds a special place for first-time home buyers in our company philosophy. Giving first-time home buyers the advice and knowledge to make an informed home buying decision is one of our truest pleasures. They are the lifeblood of the mortgage business, and exemplify one of the core aspects for why we formulated Starboard Financial. We have a plethora of real estate resources to help home buyers navigate the mortgage process for their first home purchase. The loan process can be overwhelming; it is our job to relieve as much of the stress as possible. Please consult these resources for help in your journey:
The Starboard Financial Loan Process was built around the needs of our purchase clients.
Starboard Financial would like to share our efficient loan process with potential home buyers. The diagram below provides a quick summary. Additional information for each step is provided as well. If you have any questions or would like further clarity, please feel free to contact us for more information.
Please note that in a Refinance transaction, the Pre-Qualification and Accepted Contract stages will be omitted, otherwise the Purchase and Refinance loan processes are the same.