At Tracey Financial Group, Inc., we strive to provide professional loan programs for each and every client, with their unique and individual needs, a level of service, guidance and expertise that cannot be found elsewhere.
Tracey Financial Group, Inc is a full-service mortgage brokerage providing mortgages to families and individuals. We provide loans for residential and commercial real estate purchases and refinances.
We also provide debt consolidation loans as well as construction, investment, and multi-family loans. We offer Conventional, Jumbo, Veterans Administration (VA), Federal Housing Administration (FHA), USDA and other loan programs.
Loan Programs
Fixed Rate Mortgages (FRM)
One of the most common types of loans available is a Fixed Rate Mortgage, which is a fully amortized loan where the interest rate never changes. While the allocation of monthly principal and interest change each month, the total payment never changes during the lifetime of the loan.
Adjustable Rate Mortgages (ARM)
ARM’s or Adjustable Rate Mortgages are loans that have variable interest payments during the lifetime of the loan. The interest rate is, which is dependent on market conditions, and ARMS. Commonly, ARMs have a fixed interest rate for a specific amount of time before change or adjusting.
Commercial Loans
A commercial real estate loan is a mortgage secured by a lien on commercial property as opposed to residential property. Commercial real estate refers to any income-producing real estate that is used for business purposes; for example, offices, retail, hotels, and apartments. Commercial financing options may include convention or SBA (small business administration).
Hybrid ARMs (3/1 ARM, 5/1 ARM, 7/1 ARM, 10/1 ARM)
Hybrid Adjustable Rate Mortgages have aspects of both Fixed-Rate and Adjustable-Rate mortgages and can be often be labeled “Fixed-Period ARMs.”
FHA Loans
Federal Housing Administration loans (FHA) are loan programs that often have low mortgage rates, minimal down payments and are specifically insured by the Federal Housing Administration.
VA Loans
Military veterans and reservists have access to VA loans. These loan programs are guaranteed by the Department of Veteran Affairs and offer exceptional benefits such as low-interest rates and often require no down payments. These loans were specifically created to assist veterans in transitioning from the armed forces to civilian life.
Interest Only Mortgages
Interest Only Mortgages are designed for borrowers to make payments solely towards the accruing interest and not on the principal amount for a defined period of time. The interest-only period is typically followed by either a balloon payment or an additional fully amortized term.
Components of an ARM
Before choosing a home loan that’s right for you, every individual should know the risks and advantages of ARMs or adjustable-rate mortgages, allowing the most appropriate decision to be made.
Balloon Mortgages
Included in Balloon mortgages is a note rate which remains fixed to start, but the principal balance becomes due at the end of the mortgage term.
Reverse Mortgages
Designed for seniors, Reverse mortgages allow homeowners to transform a percentage of their home equity into cash, while still residing in the home.
Graduated Payment Mortgages
GPMs or Graduated Payment Mortgages are loans which have payments increases annually in a specific set period of time. These payment increases are usually for the first 5 to 10 years, after which they convert to a fixed rate for the remainder of the life of the loan.
What kind of loan program is best for you?
Deciding on the appropriate type of loan for your needs can be overwhelming, but keep in mind that more often than not, it is an individual’s circumstances that will dictate the type of loan and that may include multiple options.
Still Have Questions?
We’re always happy to help and look forward to hearing from you – contact us.
Loan Process
Step 1: Find Out How Much You Can Borrow
LTV and Debt-to-Income Ratios
Loan-To-Value ratio or LTV is described as the amount of the loan compared to (or as a percentage of) the value of the property securing the loan. Some loan programs, including FHA and VA, will lend a high percentage of the value, possibly even 100%. Good financial standing, credit history, and property type play a significant role in the maximum exposure a lender is willing to take.
Debt-To-Income ratio or DTI is the percentage of a borrowers debt relative to their total gross monthly income. Lenders evaluate DTI to determine how much of a house payment the borrower can afford to take on. To calculate your debt-to-income ratio, add up your monthly bills which may include: Monthly rent or house payment; alimony or child support payments; student, auto, and other monthly loan payments; credit card monthly payments and other debts.
FICO™ Credit Score
FICO Credit Scores are an industry standard and a widely used measure by the majority of the lending industry to make their credit decisions. First created by Fair Isaac & Company, it is a mathematical formula which measures an individuals creditworthiness in comparison to the general population. The FICO mathematical formula takes into account several important factors such as previous payment history, total amount borrowed, overall credit history, credit card search history and specific types of credit already established. Unbeknownst to many, the act of searching for a loan or credit card has a negative effect on your overall credit score, so the best practice is to ask your lender to run your credit score only after you have decided on the appropriate loan for you.
What is a Mortgage APR?
Definition: APR stands for annual percentage rate. The mortgage APR is the annual rate charged on a home mortgage, expressed as a single percentage. The APR shows you the full cost of financing, because it includes the mortgage interest rate plus other fees or costs applied to the loan. The APR is designed to give consumers an easier way to compare one offer or loan product to another.
APR Versus Mortgage Rate: What’s the Difference?
Now you know what an APR is, what is the difference between the APR and the standard or nominal mortgage interest rate?
When you take out a mortgage to buy a house, the lender will tack on various fees and charges. These costs can increase the size of your loan and therefore the monthly payments so you need to know about them in advance. After all, you can’t compare one mortgage offer to another until you know the full cost of the loan.
That’s where the annual percentage rate comes in. The mortgage APR gives you a more complete picture of the annual cost of the loan, which allows you to more accurately compare one product to another.
Lender ‘A’ might offer you a lower interest rate than Lender ‘B,’ but that doesn’t automatically make it the best offer. You still have to account for those additional fees mentioned above. If Lender ‘A’ offers you a slightly lower rate but charges you significantly more in fees, you end up paying more — even though the mortgage rate was lower.
APRs are more useful to compare for fixed-rate loans than they are for variable-rate loans. This is because variable-rate APRs are partly based on assumptions about future rate adjustments. Because the adjustments are not certain, a variable-rate APR might not include the loan’s highest possible rate.
Self Employed Borrowers
Self-employed borrowers can find that the loan process can be a bit more cumbersome or complex when compared to a person that is employed by a company. The complexity comes from the lender’s ability to document income. Most conventional loan programs require two consecutive years of personal and business tax returns for analyzing income. In some circumstances, the lender may use utilize bank statement for determining income or may allow for a “stated income” qualification.
Source of Down Payment
At the time of a loan’s funding, the borrower will be asked to place a down payment, from verified funds, which covers closing costs and the required down payment on the loan. Commonly, the down payment is paid from assets (cash) the borrower has previously saved. In the case of a lack of funds for a down payment, the borrower may seek what is referred to as “gift funds” which may be accepted. These “gift funds” must be accompanied by a document stating that the funds do not have to be repaid and meet other applicable guidelines.
Required Documents
- W-2’s for all wage earners for the last 2 years
- One month’s pay stubs for all wage earners
- Federal Tax Returns for the last 2 years
- Verification of retirement income as applicable
- Last 2 months bank statements (checking, savings, 401(k), IRA’s, etc.)
- Copy of a valid driver’s license or government-issued identification
- Payment coupons/statements from your current mortgage and equity lines
- Homeowners Insurance bill
Step 2: Select The Right Loan Program
In order to choose the type of home loan that’s right for you, based on your individual circumstances, understanding the benefits of each is key. In general, there are two different types of home loans, regardless of if you’re buying a home or refinancing.
1) Fixed-Rate Mortgage
The first of the two types of home loans is called an FRT or Fixed Rate Mortgage, and usually have terms of 15, 20 or 30 years. Whether you choose the 15, 20 or 30-year term period, the interest rate on the loan remains the same throughout the life of the loan. This type of loan may be right for you if:
- You will be living in the home for more than 5 years
- Don’t want the risk/anxiety of fluctuating interest rates
- The stability of knowing your monthly mortgage payment will not change
- Plan on having your income and spending remain at their current levels
2) Adjustable Rate Mortgage
The second of the home loan types is called an ARM or Adjustable Rate Mortgage. As with FRTs, they also have 30-year terms for the life of the loan. While the term may be the same, the main difference in an ARM loan is that over the life of the loan, the interest rate may go up or down based on market variables and thus your monthly payments may fluctuate in the same up and down nature. ARMs may also include an “interest-only” option which means that principal would not be collected for a certain period of time. This type of loan may be right for you if:
- You think you’ll be staying in the home for less than 5 years
- Don’t take issue with fluctuating future monthly mortgage payments
- Believe your monthly income will most likely increase in the future
Tracey Financial Group, Inc. will help guide you through the various options to determine which home loan is best suited for your individual needs. We would carefully consider your current circumstances as well as future goals when making any recommendation.
Step 3: Apply For A Loan
Step 4: Begin Loan Processing
Many of the guidelines and criteria that govern lenders are set by governmental agencies, but there are a variety of factors that vary from loan to loan. Simply stated, a loan is likely approved based on four important factors:
- an individual’s ability and compliance to repay. i.e., credit history
- amount of down payment or equity in the subject property
- employment history
- the condition and value of the Real Estate securing the financing
Upon review of the loan application and associated documentation, the actual loan approval process can commence. Tracey Financial Group, Inc. will verify all of the information you have provided and any questions or concerns will be brought up for clarification, such as:
Income/Employment Check
Is your income sufficient to cover monthly payments? Industry guidelines are used to evaluate your income and your debts.
Credit Check
What is your ability to repay debts when due? Your credit report is reviewed to determine the type and terms of previous loans. Any lapses or delays in payment are considered and must be explained.
Asset Evaluation
Do you have the funds necessary to make the down payment and pay closing costs?
Property Appraisal
Is there sufficient value in the property? The property is appraised to determine market value. Location and zoning play a part in the evaluation.
Other Documentation
In some cases, additional documentation might be required before making a final determination regarding your loan approval.
In order to improve your chances of getting a loan approval:
- Fill your loan application completely. Use our online forms to expedite the process.
- Respond promptly to any requests for additional documentation especially if your rate is locked or if your loan is to close by a certain date.
- Do not move money into or from your bank accounts without a paper trail. If you are receiving money from friends, family or other relatives, please prepare a gift letter and contact us.
- Do not make any major purchases until your loan is closed. Purchases cause your debts to increase and might have an adverse effect on your current application.
- Do not go out of town around your loan’s closing date. If you plan to be out of town, you may want to sign a Power of Attorney.
Step 5: Close Your Loan
Upon approval of your loan, you will be ready to sign all of the outstanding loan documentation, making the loan final. It is imperative to review any and all paperwork before signing, making sure all of the information you have given is accurate and more importantly, the interest rate and loan terms are as promised. Finalizing of the paperwork and signing usually is done in front of a notary public.
As with many legal transactions, there are several fees associated with obtaining a mortgage and/or transferring property ownership. These fees will need to be paid upon closure of the loan process. Personal checks are generally not accepted; cashier’s checks from your bank are highly recommended for the down payment and closing costs associated with your transaction. Additionally, paperwork such as proof of homeowner’s insurance and any supplemental insurance policies, like flood insurance, may also be requested.
Closure of the loan usually happens shortly after all of the required paperwork is signed, however, for owner-occupied refinance transactions, federal law states that you have three days to review all documents before the actual loan process can officially close.
Link: https://www.investopedia.com/terms/r/right_of_rescission.asp