What Is An FHA 203K Loan?

FHA 203K loans are intended to help borrowers finance the purchase of a property as well as make home repairs, and are insured by the government. They were created in order to help people that have a lower to moderate income have the ability to afford a home. An FHA 203K loan includes both the cost of the home itself and improvements made to the home and allows borrowers to have the option of either a fixed or adjustable-rate mortgage. There are two main types of FHA 203K loans; the standard, which is intended for homes needing substantial repair and offers up to $35,000 in renovations, and the 203k limited loan, which can offer up to $35,000 in homes not needing any major structural reconstruction. FHA 203K loans can offer several advantages for a borrower, including lower interest rates, lower down payment amounts, relaxed credit eligibility requirements, and they can provide opportunities for people who may not typically be able to afford a home the chance of home ownership.

Eligibility Requirements for FHA 203K Loans

Because FHA 203K loans are backed by the Federal Housing Administration, and lenders are guaranteed repayment if a borrower defaults on the loan, eligibility requirements tend to be less strict than a traditional loan. Typical qualifications when applying for an FHA 203K loan include:

• You must have a low debt-to-income ratio, (DTI), usually at least 43% or less
• A credit score of at least 500 or higher will be required
• The current loan limits for FHA 203K loans are $420,680 in most areas, and $970,800 in more expensive locations
• You will be required to provide documentation including your credit report, social security number, income verification, and information on any additional held assets and taxes
• You must make a down payment of at least 3.5%
• You must not have foreclosed on a home within the past three years
• The 203K loan may only be used if the property is used as the borrower’s primary residence
• The home renovations must be made by a contractor, not the borrower themselves

If you are interested in an affordable way to purchase and renovate a property in Conyers, Georgia, an FHA 203K loan may be a suitable option for you. Contact Preferred Capital Funding today for a consultation.

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How Do Portfolio Loans Work?

In the traditional mortgage process, a lender sells your debt to a third party such as Freddie Mac or Fannie Mae rather than keeping it in order to be able to lend money to other borrowers. These mortgage types must meet specific guidelines so that they can be sold off, but in certain cases, mortgages are not aligned with these guidelines. In this situation, the loan becomes known as a portfolio loan, and since the debt isn’t sold off, it becomes part of the lender’s portfolio.

Portfolio loans are intended to help borrowers who normally may not be able to meet eligibility requirements qualify for home financing, and they’re usually offered by smaller credit unions or banks rather than larger, corporate financial institutions. They can help borrowers who may have a lower credit score, who are self-employed, or who may have had a previous bankruptcy or foreclosure own a home. Because portfolio loans have alternative eligibility requirements, lenders may require bank statements to verify income rather than a borrower’s tax information.

The Benefits of Obtaining a Portfolio Loan

Although portfolio loans may not suit certain borrowers, they do offer several advantages for others. One primary benefit of a portfolio loan is that the application requirements are not as strict as a traditional loan because lenders set their own guidelines that do not have to adhere to conforming loan standards. This aids borrowers who may struggle to qualify for a traditional home loan to finance a property. Portfolio loans also do not require private mortgage insurance, which can save a borrower a significant amount of money over time. Additionally, with a portfolio loan, you are more likely to have a closer relationship with your loan officer because you will be working with them throughout the life of the mortgage, which could prove to be beneficial if any issues arise during the loan term.

Get Help Financing Your Property with a Portfolio Loan

If you are ready to purchase a home in Conyers, Georgia, and have unique borrowing needs, you may want to consider a portfolio loan. Contact Preferred Capital Funding today for a consultation.

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How Does An Adjustable Rate Mortgage Work?

The interest rate in an adjustable rate mortgage, (or ARM), varies throughout the loan term, which means that basically the interest either raises or decreases. Initially, with this type of loan, the interest rate remains fixed for a period of time, and usually during this time, this initial interest rate is lower than that of a fixed rate mortgage. Then, after that specific time period, the ARM interest rates begin to change depending on current economic benchmarks. It is important to note that in some instances, when an adjustable rate mortgage rate increases, a borrower may need to pay a higher interest rate than a fixed rate mortgage. Fortunately, there are limits that help a borrower from severe interest rate hikes in adjustable rate mortgages.

What Are The Advantages Of Opting For An Adjustable Rate Mortgage?

Obtaining an adjustable rate mortgage can offer borrowers several benefits. First of all, it can be a very advantageous option for a borrower who is looking to relocate after a couple of years and is able to take advantage of the lower initial interest rate at the beginning of an ARM and pay off the mortgage before the interest rate can increase. Additionally, during this time of a lower initial interest rate, a borrower also may be able to either save or invest the money they save during the period of low interest. An adjustable rate mortgage can help borrowers take advantage of decreased interest rates without having to refinance the loan and help them avoid paying those associated refinancing and closing cost fees.

Getting Assistance With Applying For An Adjustable Rate Mortgage

There are many decisions a potential homeowner must make when buying a home, and some of them can help save a borrower a significant amount of money. Depending on your unique situation, an adjustable rate mortgage may be able to offer some excellent benefits. If you are looking to buy a home in Conyers, Georgia, the loan specialists at Preferred Capital Funding can work closely with you to determine your best mortgage option. Contact us today for a consultation.

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How Do SBA Loans Work?

SBA loans are designed to help small businesses, and are partially backed by the government. They can be used to refinance an existing loan or help open up a new business location. Since SBA loans are insured  by a federal agency, they pose less risk to lenders because if a borrower is unable to make a mortgage payment, the SBA will back part of the loan. This also allows SBA loans to offer more flexible terms and low interest rates. It is important to note that since SBA loans have a connection to the government, loan qualifications can be stricter and the application process can take a longer amount of time.

What Are the Benefits Of An SBA Loan?

SBA loans can be an excellent way to help finance your business, and they offer several benefits, including favorable, capped interest rates and longer repayment terms. SBA down payment amounts also are lower than that of traditional loans, and there are a variety of SBA loan types available so you can help find financing that best suits your type of business. You may also be able to finance up to 80 to 90 percent of your projected cost with this type of loan.

Qualifying For An SBA Loan

SBA loan lenders tend to seek businesses with a proven success record that demonstrate the capability of affording the mortgage payments. Typical SBA loan requirements include:

• An adequate amount of equity built up in the business
• A minimum credit score between 620-640
• In order to be eligible, the business must be classified as for-profit and based within the United States
• The ability of the borrower to prove that the business is financially stable
• The business to be at least two years or older; the longer your business has been in operation, the more likely you are to obtain loan approval
• The business must meet the SBA standards of small business classification

Enhance Your Business With An SBA Loan

If you are interested in purchasing or revamping your business in Conyers, Georgia with an SBA loan, Preferred Capital Funding is here to help. Contact our office today for a consultation.

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What Down Payment Should I Offer on a New Home?

First, you should check around the area to see if any agencies or the government offer down payment assistance programs. If you are low to moderate income, there may be ways to help you afford a down payment. The next step is to review what homes in the area are going for, what the lenders generally require, and how much down payment you will need. Many lenders seek a 20% down payment, but that is not always the case. Certain banks allow you to purchase mortgage insurance if you do not end up providing 20%.  There are other programs that require a lower down payment. Here are some examples:

• FHA Loans—First-time home buyer loans are backed by the Federal Housing Administration (FHA), which can offer mortgages to first time home buyers with down payments as low as 3.5% and sometimes even less!
• VA Loans—Veterans Affairs loans are for eligible service-members, check with the VA to see if you qualify for a mortgage with zero down payment.
• USDA Loans—US Department of Agriculture loans can help you afford a down payment if you purchase a home in a qualifying area.

What to do When You’re Ready to Save Up Funds

Even if you get down payment assistance, you still need to save up money if you want to buy a new home. Imagine the repairs and other insurance costs! You will have many ongoing expenses. Below are some great ways our clients have saved up:

1) Finding extra income through a second job or other second source of income and depositing the extra money into a savings account.

2) Opening a savings account, CD, bond, or money market with a high yield interest rate to hold the funds for the down payment. Find out how much you can save, then set-up an automatic transfer to move money this into the account from your monthly paycheck.

3) Rounding up the change from purchases to place into a savings fund! Many banks let you round up the spare change on any purchase and move it into a savings account.

4) Reducing your non-essential spending, like meals out, vacations, eating out, new clothes, etc.

Preferred Capital Funding in Conyers, GA is here to help you save up for a down payment and find great financing programs for new homes.

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Bank Statement Lending

If you are not armed with W-2s or paychecks, a bank statement loan may be a wonderful way to find a mortgage. When approving a bank statement loan, lenders will review all your bank deposits and records to determine how much you can afford to borrow. Underwriters calculate for business, contract, or investment income. It is best to speak to your accountant on how to document your income in your accounts. Mortgage lenders usually ask for about 12 months of personal bank statements and 24 months of business statements. Formulas are then used to determine an average monthly income and any other liabilities you may have. If you have a business, you should ask your accountant to provide a profit and loss statement, particularly if you use one account for both personal and business finances. To get approved for a bank statement loan, you will also need good credit (usually a score of at least 680 is required).

The Benefits of Using Loans for the Self-Employed

There are several benefits to using a self-employed loan. For instance, some banks permit the self-employed to account for “asset depletion” in their approval process. They may apply a formula to review a borrower’s liquid assets and count them towards your average income. In this sense, you may be able to leverage great income off your stocks, bank, and retirement accounts to fund your mortgage payments. This means you can skip the paperwork for employment or other income. If you decide to go this route, then you need to demonstrate strong cash flow with your investments.

Getting Ready to Use a Self-Employed Loan

There are countless ways you can use self-employed loans to buy your dream home. Just reach out to a member of our experienced team for help. We help find solutions for borrowers who do not have a lot of standard loan review documentation. Don’t let having non-traditional income stop you from getting approved for a mortgage. Contact Preferred Capital Funding for more tips on how to use bank statement loans at our Conyers, CA office.

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Two Types of Rebate Programs

According to the National Resources Defense League, the Inflation Reduction Act benefits homeowners through two tax rebate programs that have deadlines into 2031. The goals of the National Resources Defense League are to reduce carbon pollution and to advance clean energy. This is also one main goal of the Inflation Reduction Act. The Act also helps homeowners save on utilities when used appropriately.

The HOMES Rebate Program

This program will provide $4 Billion to states to aid homeowners in making their house more energy efficient. If you make home upgrades that save on energy usage by up to 35% then you may be eligible for up to $4000 in tax rebates. This amount is doubled for low to moderate income homeowners, per CBS News.

The High-Efficiency Electric Home Rebate Act (HEEHRA)

The High-Efficiency Electric Home Rebate Act (HEEHRA) was made to provide tax rebates specifically to low- and middle-income families. Homeowners may use the rebate to improve on home utility needs. For instance, they can install heat pumps or electric, energy-saving appliances like clothes dryers. The maximum rebate a homeowner can get is up to $14,000. People are not permitted to apply more than once for the same upgrade. So, if you plan to use the HEEHRA to make an eligible upgrade, you cannot also use the HOMES Rebate Program.

Help with the Up-Front Costs of Upgrading Your Home

Our team at Preferred Capital Funding knows there can be a lot of up-front expenses when upgrading your home. Such costs may not be fully covered by these new rebate programs. We are here to help if you want assistance financing the expenses needed to maximize energy efficiency. It’s a great time if you want to improve the quality and value of your home. If you are uncertain about how you can benefit from the Inflation Reduction Act rebates, our team can help address questions. Contact Preferred Capital Funding in Conyers, Georgia to schedule a consultation or get a free quote for financing.

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