CONFORMING FIXED RATE LOANS

Overview – A fixed rate of interest is paid over the life of the loan`(10, 15, 20, or 30 years). Monthly payments for interest and principal never change. Property taxes and homeowners insurance may increase, but generally your monthly payments will be very stable.

Occupancy - Property may be owner occupied, a second home or investment property.

Eligible Borrowers - Borrowers may be a US Citizen, permanent resident alien or a non-permanent resident alien that can provide a valid current visa, evidence current US employment; satisfy a US or non-traditional foreign credit history.  US income must be reasonably expected to continue for three years.  Foreign Nationals are not allowed.

Minimum Down Payment - Standard conventional loans can be obtained with no money down.

Gifts - Gifts are allowed to assist towards closing costs and reserves for owner-occupied properties.  Gifts are allowed from family member provided there is a complete paper trail. 

Credit Requirements - A residential mortgage credit report is required.  The borrower's credit history must demonstrate a past willingness and ability to meet credit obligations.  The borrower's credit history is reviewed over the past seven years to determine whether there are any major indications of derogatory credit (such as judgments, bankruptcies etc).  A review of only the past 24 months history is made for minor instances of derogatory credit.

Some programs and rates are based on the credit scores of the borrower.  Typically, the programs offering lower down payments require higher credit scores. 

A borrower's credit history is generally considered acceptable if over the past 12 months the borrower has had

• no payments 60 days or more past due and no more than two payments 30 days past due - for all of his or her revolving credit accounts (credit cards);

• no payments 60 days or more past due and not more than on payment 30 days past due - for all of this or her installment credit accounts (car loans);

• no payments past due - for all of his or her housing debt (first or second mortgage, rent).

Judgments - Any judgments, garnishments or liens must be paid in full before closing.  A satisfactory letter of explanation must be furnished and borrower must have re-established credit.

Bankruptcy - A bankruptcy must have been discharged fully and the borrower must have re-established good credit and demonstrated an ability to manage financial affairs.  An elapsed time of at least three years between the discharge of the bankruptcy and the mortgage application is sufficient time to re-establish credit.  A shorter elapsed time, but not less than 12 months, is justified if extraordinary circumstances caused the bankruptcy (such as an extended illness that was not covered by health insurance) and that the borrower's current situation is such that the events that led to the bankruptcy are not likely to recur.

Foreclosure - Generally a borrower is not eligible if the borrower(s) has been a defendant in mortgage foreclosure proceedings that were completed in the past three years.  However if the foreclosure was the result of extenuation circumstances that were beyond the control of an owner-occupant borrower - such as a serious, long-term illness; death of the principal wage-earner; or loss of employment because of factory slowdowns or shutdowns, reductions-in-force, etc., and as long as the borrower has re-established good credit and has demonstrated an ability to manage financial affairs and at least two years between the date of the foreclosure sale on the date of the mortgage application as sufficient time to re-establish credit.  A shorter elapsed time - but not less that 12 months - may be justified if extraordinary circumstances (such as death or long-term illness) led to the foreclosure.  This exception for previous mortgage foreclosures does not apply if the borrower used the property that was foreclosed on as a second home or for investment purposes.

Reserves - Owner occupied and second homes require two months PITI in reserves.  Investment properties require six months PITI reserves.

Income Qualification - Stable monthly income consideration includes all income expected to continue for three years.

• Secondary income (over-time, bonus, part-time) received for less than 24 months may be used providing there is a 12 month prior earnings history to support the income stream.

• Tax-exempt income eligible for grossing up to 25%.

• Alimony & Child Support consideration as effective income requires a minimum of 12 months evidence of receipt and three year continuance; payments received for 6-12 months can be considered provided the amount does not exceed 30% of total gross income; if received for less than 6 months, cannot be considered as income.

• Capital gains income may be considered for qualifying with a two year history.

• Royalty income must have a 12 month minimum receipt and a likelihood of continuance for three years remaining.

• Disability income must be stable and document a continuous term remaining for a minimum of three years.

Investment Properties - All approved investment property transactions must comply with the following:

• Maximum number of financed properties is limited to 10.

• Two year history of  managing real estate and providing rent loss insurance coverage.  This requirement can be waived if the borrower qualified with the full PITI payment without consideration of rental income.

• Multiple investment mortgages, within the limits, made to each borrower will require sufficient reserves to cover for all mortgages.

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