Blog posted On May 31, 2018
At this year’s Mortgage Bankers Association (MBA) Secondary Marketing conference, one of the most prevalent topics of discussion was the growing market for different types of mortgage loans besides common options like the 30-year fixed rate mortgage. The 30-year fixed-rate mortgage is the cornerstone of American homeownership and has helped families nationwide become homeowners for almost a century. As the housing market changes, interest rates fluctuate, and regulations evolve, newer, more innovative mortgage products are starting to emerge. In today’s mortgage market, your mortgage should not be “one size fits all.”
To find the best mortgage for your home purchase or refinance, it is best to consult a mortgage professional to review your goals and set expectations. Here are some examples of non-traditional mortgage loans and programs that could be the right fit for your home financing needs.
The All In One LoanTM
Traditionally, a significant portion of the monthly mortgage payment goes toward mortgage interest. Mortgage interest can end up costing the borrower tens of thousands of dollars throughout the life of the loan. The All In One Loan applies payments toward the loan principal first, instead, by combining banking and mortgage financing into one account. Paychecks and bank deposits are applied to the loan principal first, reducing the cost of lifetime mortgage interest. The loan works like a checking account and borrowers can withdraw money to pay for bills or other expenses with no changes to budget or behavior. The All In One Loan is especially useful as home values rise, because it gives homeowners a chance to leverage accruing home equity.
Saving for a down payment is consistently reported as the biggest obstacle to buying a home. As home prices rise, down payment requirements are growing proportionately. HomeFundIt gives home buyers a chance to grow their down payment with crowdfunding. Users set up an account online, get prequalified, and create a unique campaign page. They can then share the link with family, friends, and anyone else in their personal network. Anyone who wants to help contributes right through the campaign page. All funds collected are compliant with Fannie Mae and Freddie Mac and are ready to be used at the time of home purchase. To date, HomeFundIt has helped over 300 families raise over $900,000 nationwide.
With limited for-sale inventory, some home buyers are looking to expand their home search and some homeowners are choosing to stay in their homes longer. With the 203(k) Renovation Loan, home buyers or homeowners are able to combine the costs of repair and remodeling with the cost of the mortgage loan, into one convenient monthly mortgage payment. For homeowners, the renovation loan allows them to complete necessary repairs to adapt their home to fit their ongoing needs. For home buyers, the renovation loan gives them the option to expand their search to properties that may cost less up front but are in need of repair or renovation. With renovation financing, you have a chance to turn the house you like into the home you love.
Mortgage loans are not one size fits all. Your loan officer’s job is to find the best mortgage for your immediate and long-term financial goals. If you think you could benefit from a non-traditional type of mortgage financing, consult a trusted mortgage professional first to find out what’s best for you.