Choosing a Loan

You may already have some goals in mind for financing, but do you know which loan option will help you meet those goals? Selecting the right mortgage is central to the financing process, so it's important to understand your options. You'll need to consider two things at the outset: which loan type meets your financing needs, and which loan term can provide the ideal repayment schedule that meets your needs.

Loan Types

Most home loans fall into one of two general categories: fixed-rate mortgages and adjustable rate mortgages (ARMs). You'll also encounter other basic loan types such as renovation loans.

• Fixed-rate mortgages have interest rates that stay the same for the entire loan term.
• You will have predictable monthly payments throughout the life of the loan.
• You'll be protected from rising rates.
• Fixed-rate loans can be a good refinance option when rates are low.
  


• Adjustable-rate mortgages have interest rates that adjust periodically based on market
  conditions.
• The initial rate is fixed for an introductory period (usually three to ten years), and is typically lower than for a fixed-rate mortgage. After that the rate adjusts annually or semi-annually depending on the product and based on a market index, but can't go above a predetermined adjustment cap.

Loan Terms

The “term” of a loan is the period of time you will spend repaying it. The most common loan term is 30 years, but other options are also available. There are 20-, 15- and 10-year mortgages for those who want to repay their loan faster.

Whether you'd be better off with a longer loan term or a shorter one depends on a number of factors, most notably your monthly income and long-term financial goals.

• Longer mortgage terms usually feature lower monthly payments, and can be a good option if you're on a tight budget or would prefer to direct your monthly cash flow toward other investments or expenses .
  
  
• Shorter mortgage terms mean higher monthly payments, but allow you to repay the loan faster and can potentially reduce how much you spend on interest.
  
  

Whatever loan type or term you choose, Lawhorn & Associates provides a wide variety of loan options to meet your unique financing and refinancing needs. Our home mortgage consultants can help you find the right combination of loan features to support your financial goals. Contact us to get started today!

Government Loans

Buying a home is an important step to financial security, and the right mortgage financing can make it a reality. Let Lawhorn & Associates, a FHA/VA mortgage lender, see if these programs are right for you.

FHA Loans

The Federal Housing Administration (FHA) backs qualified loans provided by Lawhorn & Associates to promote homeownership for those with:

• low- or moderate-income
• limited savings
  
  

FHA loan limits vary by county, with larger loan amounts allowed in areas with higher housing costs. Contact a Lawhorn & Associates consultant to see about FHA loan limits in your area.

FHA loan features include:

• Low down payment requirements
• Flexible income, debt, and credit requirements
• Down payment and closing costs that may be funded by a gift or grant
• A variety of fixed-rate and adjustable-rate loan options from Lawhorn & Associates
  
  

VA Loans


The Department of Veterans Affairs (VA) backs loans provided by Lawhorn & Associates to help qualified veterans, reservists, and active-duty service members to finance their homes.1 VA loans may be right for veterans with:

• low- or moderate-income
• limited funds for down payment
  
  

VA loans provide these features:

• A no down payment option
• Flexible income, debt and credit requirements
• Down payment and closing costs that may be funded by a gift or grant
• A variety of fixed-rate and adjustable-rate loan options from

USDA Rural Development Loans

Eligibility: Applicants for loans may have an income of up to 115% of the median income for the area. Families must be without adequate housing, but be able to afford the mortgage payments, including taxes and insurance. In addition, applicants must have reasonable credit histories.
Terms: Loans are for 30 years. The promissory note interest rate is set by the lender. There is no required down payment. The lender must also determine repayment feasibility, using ratios of repayment (gross) income to PITI and to total family debt.

Reverse Mortgage

A reverse mortgage is exactly what its name implies — a loan whose features make it essentially the reverse of a traditional "forward" mortgage. Instead of making monthly payments, you can choose to receive them. That’s the “reverse” part of a reverse mortgage. Instead of turning your income into equity, you turn your equity into readily accessible funds.

That last feature — the ability to turn your equity into readily accessible funds — is what most distinguishes a reverse mortgage from other loans, and it's what can make it valuable to senior homeowners. Having spent years repaying the mortgage that allowed you to buy your home, you can now tap into that investment to help you achieve your goals later in life. However you plan to use your equity — whether paying medical expenses, improving your home, or just adding a bit of cushion to your monthly budget — you'll have a golden opportunity to put your nest egg to work for you.

Find the right combination of loan features to support your financial goals

What happens to my home?

You remain the owner for as long as you continue to live there, keep the taxes current and maintain the property to FHA standards. After all, you've put a lot of money into your home, and you should have control over how to take it out.

Who is eligible?

To be eligible for a reverse mortgage, all owners listed on the home's title must be at least 62 years of age and occupy the home as their principal residence for the majority of the year. The property must be a single-family or a one-to-four unit, owner occupied dwelling. Townhomes, detached homes, condominium units, planned unit developments (PUDs), and some manufactured homes or new construction properties are eligible.

Speaking with an approved reverse mortgage counselor is another important eligibility requirement. The Department of Housing and Urban Development (HUD) supervises counseling agencies that can work with you in person or, more commonly, over the phone. Be aware that a fee is charged for these services. Your Lawhorn & Associates reverse mortgage consultant can provide you with a list of authorized counselors.

• Renovation loans can provide a good alternative to taking out a second mortgage for borrowers who are planning home improvements.
  
  
• The amount you can borrow is based on the projected value of your home after renovation.
• You can finance the repayment of your additional mortgage, and get extra cash to fund your improvement project.