Fixed-Rate Mortgages - The primary advantage of a fixed-rate loan is its stability. Once you have locked in your rate, it stays the same, no matter how much interest rates rise or fall. Although the payment on a 30-year mortgage tends to be lower, the payment for a 15-year mortgage is usually only slightly higher. Many homeowners choose a 15-year term to lower the overall cost of interest expense and they can expect to save tens of thousands of dollars in interest. The 15-year term also enables the homeowner to build up equity much more quickly than with a 30-year term.

Adjustable Rate Mortgages (ARMS) - An ARM usually features a low initial rate which may be adjusted up or down periodically, based upon the terms you select. Discount Funding Associates offers a number of flexible terms, including 1 -year, 3/1, 5/1, 7/1 and I 0/1 options. ARMs can be particularly helpful to first-time homebuyers who expect their income to increase over time and wish to buy more house for their money. ARMs are also useful to those individuals who expect to own a house only for a limited time, before relocating or moving up to a larger home. Either way, should the homeowner choose to do so, an ARM can be refinanced to lock in a fixed rate at any time.

Interest Only Loans - Interest Only loans are tied generally tied to 3/1, 5/1 and 7/1 ARMs. The borrower is only obligated to pay the interest for the fixed portion of the loan. At the end of this period, the full payment is then required. This gives the borrower the advantage of a lower monthly payment and the flexibility to pay down principal at any time.

Buydowns - In certain situations, an individual (either a buyer, seller or builder) will give money to the lender in order to lower the buyer’s interest rate and, therefore, lower their monthly mortgage payment, either for a specific period or for the life of a loan, The offset for this type of loan, known as a buydown, can be particularly advantageous to first-time homebuyers.

100% Financing - Most mortgages do not cover all of the purchase price, and the borrower must come up with the remaining amount as a down payment.

103% Financing - a loan which exceeds the actual purchase price of the home by 3% to help cover closing costs.

COFI Loans - The 11th District Cost of Funds Indexed loan program (C.O.F.I.) is one of the most mis-understood programs available in the market today. It is a unique ARM product that solves many cash flow issues for today’s homebuyers and owners. It is widely recognized as one of the slowest moving indexes available in the market. This is due to the fact that the index is based on the Average interest rate Banks pay their depositors on short-term savings accounts. Remember, banks don’t want to pay you a high rate of interest on your savings. The COFI loan allows you to make many different payment levels each month. Full Principle & Interest payment, Interest Only, or a Minimum payment (which is less than the Interest only payment). If you only make the Minimum payment you will incur “Negative Amortization” (your loan amount increases).

COSI Loans - adjustable payment loans that use the Cost of Savings Index (COSI) to base its lending. The COSI or Cost of Savings Index contains an average of interest checking, savings, and 3, 4, and 5 year Certificates of Deposits or CD's. The COSI does change monthly, while the margin remains fixed for the life of the COSI loan, so your rate is comprised of the index and a fixed margin. Also, you can expect that your payment will change annually on a specific date with a COSI Loan.

Low Doc Loans - Low doc stands for low documentation. These special loans aid borrowers who qualify to apply for a loan without having to document certain financial information.

No Doc Loans - In some cases, a highly qualified borrower can apply for a loan that requires no documentation of their financial picture. The general rule of thumb is, the less information that is documented the higher the interest rate the lender must charge for the loan. These types of loans are often referred to as “loans outside the box”.


80/10/10 and 80/15/5 loans - Loans With No PMI - Private mortgage insurance (PMI) is a type of insurance that protects the lender should a borrower default. Traditionally, PMI has been required when the borrower’s down payment or equity in a home is less than 20 %. Generally, PMI is financed as part of the mortgage, so the borrower assumes the cost. Home Mortgage Resources offers homebuyers a way to avoid PMI, even though their down payment may be only 5%,
10% or 15%. Through the use of a second trust, a buyer can finance part of their down payment and avoid paying PMI.

Home Equity Line of Credit - This revolving line of credit works similarly to its fixed-rate counterpart and offers the same advantages. The interest rate is, however, variable and is tied to the Prime Rate. With a home equity line of credit, you have a ready line to access for purchases and expenses; which means you borrow only what you need when you need it. And as you repay your outstanding balance, your line is replenished.

Home Equity Loans - With this fixed-rate loan, you can utilize the equity you have built up in your home. The amount you can borrow is generally determined by how much equity (your share of ownership) you have in your house, and all loan proceeds are disbursed at settlement. Because this loan is secured by your home, the interest rate is typically much lower than for other types of consumer loans. As with first mortgages, the interest expense on a home equity loan may be tax-deductible (consult your tax advisor for details). Moreover, home equity loans are not subject to PMI. Considering the low cost and possible tax advantages, a home equity loan can be a great way to borrow.

LOANS THAT ARE NOT OFFERED BY DISCOUNT FUNDING ASSOCIATES:

Federal Housing Administration (FHA) Loans
As part of the U.S. Department of Housing and Urban Development (HUD), the FHA is primarily responsible for insuring residential mortgage loans made by qualified lenders. While commonly referred to as "FHA loans" the term actually means FHA-insured loans, since the FHA does not actually lend money. FHA loans are quite popular, because the income and other qualifying requirements for these loans are generally much more flexible. FHA loans are also assumable and require low down payments. FHA offers a fixed rate and a 1/1 adjustable rate mortgage. Both programs require only a 3% down payment.

Veterans Administration Loans
As an independent agency of the U.S. Government, the Veterans Administration (VA) is responsible for the administration of various programs which benefit U.S. serviceman. Although the VA itself doesn't make mortgage loans, it does guarantee the repayment of loans made to veterans. VA-guaranteed loans usually feature flexible terms, low down payments and less restrictive qualifying requirements, making it easier for veterans to purchase homes. VA loans are also assumable.

Credit history: Your credit history shows how you have handled your financial obligations. Your lender needs to check your credit report to see how you have managed your past debt. Your credit report is a record of your credit history, maintained and sold by a credit bureau.

Residency and employment: Your length of residency and employment help lenders develop a feeling of your personal stability

Down Payment: The down payment is usually figured as a percentage of the purchase price. Lenders consider that the more down you put the less you are likely to forfeit on the loan, because you have bigger stake in your home

Cash Reserve: Lenders want you have enough cash or other liquid assets to provide a few month reserve to cover your living expenses in the event of an emergency.

Property Appraisal: Lenders must find out what the house you want to mortgage is currently worth by getting an appraisal, a written report prepared by an appraiser. This could be the final stumbling block if the appraised value falls below the purchase price. You may have to increase your down payment to have the mortgage approved.

1) Verification of Deposit (VOD): Form signed by the borrower's financial institution verifying the status and balance of his/her financial accounts. The VOD is a requirement on most purchase loans.

2) Verification of Employment (VOE): Form signed by the borrower's employer verifying his/her position and salary. Some lenders do not require income, only position and length of time when requesting a VOE. Many lenders will contact the borrower's employer and accept a verbal VOE instead of one that is written.

3) Verification of Mortgage (VOM): Form used to verify the existing mortgage balance, monthly payments and late payments, if any.

4) Verification of Rent (VOR): Form used to verify monthly rents paid and late payments, if any.