First Time Home Buyer Assistance

Owning a home can be a significant first step in attaining financial independence. Franklin Advantage can help you eliminate rent payments, build equity, and feel the personal satisfaction of calling your home your own. It is our mission to help you realize the American dream of home ownership.

Franklin Advantage has a multiple options to help you buy a home, refinance your current home or invest in real estate. If you have any additional questions, you can LIVE CHAT with one of our Franklin Advantage professionals. If you want to Apply Now, just follow the link to our Easy Application Page

Conventional and Government Loans

Any mortgage loan other than an FHA, VA or an RHS loan is a Conventional loan.

FHA Loans

The Federal Housing Administration (FHA), which is part of the U.S. Dept. of Housing and Urban Development (HUD) was created as part of the National Housing Act of 1934. It administers various mortgage loan programs. FHA loans have lower down payment requirements and are easier to qualify than conventional loans.

The Department of Housing and Urban Development (HUD) is the federal agency responsible for national policy and programs that address America's housing needs. The Federal Housing Authority (FHA) which is part of the HUD plays a major role in supporting homeownership by underwriting homeownership for lower- and moderate-income families. FHA assists first-time home buyers and others who might not be able to meet down payment requirements for conventional loans by providing mortgage insurance to private lenders. Everyone, who has a satisfactory credit record, enough cash to close the loan, and sufficient steady income to make monthly mortgage payments can be approved for an FHA-insured mortgage. To get a FHA-insured loan, you need to apply to a HUD-approved lender.

FHA-insured loans are available in urban and rural areas for single family homes, for 2-unit, 3-unit, and 4-unit properties, and for condominiums. Interest rates on FHA loans are generally market rates, while down payment requirements are lower than for conventional loans. Down payments can be as low as 3.5 percent, and closing costs can be wrapped into the mortgage.

Section 203(b) is the most frequently used FHA program. You may use this program to purchase new or existing family homes in both urban and rural areas. A section 203(b) fixed mortgage may be repaid in monthly payments over 15 or 30 years.

Section 234(c) provides mortgage insurance for buyers who wish to purchase a unit in a condominium project. Any condominium project must be approved by HUD.

FHA also insures loans for home improvements -- 203(k) loans. Section 203(k) mortgages allow you to purchase or refinance and rehabilitate a home at least 1 year old. A portion of the loan proceeds are used to pay off the existing mortgage, and the remaining funds are placed in an escrow account and released as rehabilitation is completed. The improvements financed with Section 203(k) mortgage proceeds must comply with HUD's Minimum Property Standards and all local codes and ordinances.

If you have any additional questions, you can LIVE CHAT with one of our Franklin Advantage professionals. If you want to Apply Now, just follow the link to our Easy Application Page

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VA loans

VA loans are guaranteed by U.S. Dept. of Veterans Affairs. The guaranty allows veterans and service persons to obtain home loans with favorable loan terms, usually without a down payment. It is easier to qualify for a VA loan than a conventional loan. The U.S. Department of Veterans Affairs does not make loans, it guarantees loans made by lenders. VA determines your eligibility and, if you are qualified, VA will issue you a certificate of eligibility to be used in applying for a VA loan.

If you have any additional questions, you can LIVE CHAT with one of our Franklin Advantage professionals. If you want to Apply Now, just follow the link to our Easy Application Page

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RHS Loan Programs

Rural Housing Service (RHS) was created in 1994 as a result of the Department of Agriculture Reorganization Act to meet housing and community development needs of rural America. The RHS guarantees loans for rural residents with minimal closing costs and no down payment.

More rural families and individuals may be able to become homeowners with the help of the Rural Housing Service Programs. The USDA Rural Housing Service has various programs available to aid low- to moderate-income rural residents to purchase, construct, repair, or relocate a dwelling and related facilities. USDA rural housing loan programs allow qualified homebuyers to get loans with minimal closing costs and no down payment.

Section 502 Rural Housing Guaranteed Loan Program

Under the Guaranteed Loan program, the Rural Housing Service guarantees loans made by private sector lenders. A loan guarantee through RHS means that, should the individual borrower default on the loan, RHS will pay the private financier for the loan.

The purpose of this loan program is to enable eligible low- and moderate-income rural residents to acquire modestly priced housing for their own use as a primary residence. The program is available for the purchase and repair of existing and newly constructed dwelling.

There is no required down payment, but families must be able to afford the mortgage payments, including taxes and insurance. In addition, applicants must be without adequate housing and be unable to obtain credit elsewhere, yet have acceptable credit histories.

Ginnie Mae which is part of HUD guarantees securities backed by pools of mortgage loans insured by these three federal agencies - FHA, or VA, or RHS. Securities are sold through financial institutions that trade government securities.

If you have any additional questions, you can LIVE CHAT with one of our Franklin Advantage professionals. If you want to Apply Now, just follow the link to our Easy Application Page

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Conforming Loans

Conventional loans may be conforming and non-conforming. Conforming loans have terms and conditions that follow the guidelines set forth by Fannie Mae and Freddie Mac.

Fannie Mae (Federal National Mortgage Association) was established in 1938 as a mechanism to make mortgages more available to low-income families. In 1968, the government converted Fannie Mae into a private shareholder-owned corporation in order to remove its activity from the annual balance sheet of the federal budget. In 1970, the government created the Freddie Mac (Federal Home Loan Mortgage Corporation) to compete with Fannie Mae and, thus, facilitate a more robust and efficient secondary mortgage market.

These two stockholder-owned corporations purchase mortgage loans complying with the guidelines from mortgage lending institutions, packages the mortgages into securities and sold the securities to investors through the secondary mortgage market. By doing so, Fannie Mae and Freddie Mac, like Ginnie Mae, provide a continuous flow of affordable funds for home financing.

Fannie Mae and Freddie Mac guidelines establish the maximum loan amount, borrower credit and income requirements, down payment, and suitable properties. Fannie Mae and Freddie Mac announce new loan limits every year.

If you have any additional questions, you can LIVE CHAT with one of our Franklin Advantage professionals. If you want to Apply Now, just follow the link to our Easy Application Page

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Agency Jumbo Loans

In 2007 and 2008 with the advent of the Credit Crisis Fannie Mae and Freddie Mac raised loan limits in designated high cost areas. Loan limits in high cost� areas could now be calculated at 125% of the area median income to a maximum loan amount of $729,750 for a single family residence. If 125% of the area median home price is less than $417,000, the maximum loan amount remains $417,000 and borrowers will qualify under the standard Fannie Mae and Freddie Mac programs.

Agency Jumbo loans are available on 30 and 15 year fixed rate loans and 5/30, 7/30, and 10/30 hybrids. Interest only options are available on the 30 year fixed rate loan and on all available hybrids. Though the intent was to price Agency Jumbos at the same rate as conforming loans, pricing is higher. The market simply assumes there is greater risk and prices for that perceived risk.

If you have any additional questions, you can LIVE CHAT with one of our Franklin Advantage professionals. If you want to Apply Now, just follow the link to our Easy Application Page

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Jumbo Loans

Loans above the maximum loan amount established by Fannie Mae and Freddie Mac are known as 'jumbo' loans.

Jumbo mortgage loan options are similar to traditional loan programs. They simply require a slightly higher down payment, usually of an additional 5% for similar program types. No-money-down programs are not available, but instead require a minimum of 5% down payment for a jumbo mortgage.

If you have any additional questions, you can LIVE CHAT with one of our Franklin Advantage professionals. If you want to Apply Now, just follow the link to our Easy Application Page

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Alt-A Loans

An Alt-A mortgage, short for Alternative A-paper, is a type of U.S. mortgage that, for various reasons, is considered riskier than A-paper, or "prime", and less risky than "sub-prime," the riskiest category. Alt-A interest rates, which are determined by credit risk, therefore tend to be between those of prime and sub-prime home loans.

There are numerous factors that might cause a mortgage not to qualify under Fannie Mae and Freddie Macs traditional lending guidelines even though the borrower's creditworthiness is generally strong. A few of the more important factors are:

In this way, Alt-A loans are "alternatives" to the standard of conforming, Fannie Mae and Freddie Mac backed mortgages

The Credit Crisis has all but eliminated the appetite for Sub-prime and Alt-A loans among investors. These products are currently not available.

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Sub-prime Loans

Loans that do not meet the borrower credit requirements of Fannie Mae and Freddie Mac are called Sub-prime loans vs. 'Prime or A' paper conforming loans. Sub-prime loans are offered to borrowers that may have recently filed for bankruptcy, foreclosure, or have had late payments on their credit reports. Their purpose is to offer temporary financing to these applicants until they can qualify for conforming "A" financing. The interest rates and programs vary, based upon many factors of the borrower's financial situation and credit history.

The Credit Crisis� has all but eliminated the appetite for Sub-prime and Alt-A loans among investors. These products are currently not available.

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Fixed Rate Mortgages

With fixed rate mortgage loan the interest rate and your mortgage monthly payments remain fixed for the entire term of the loan. Fixed-rate mortgages are available for 40, 30, 25, 20, 15 years and 10 years. Generally, the shorter the term of a loan, the lower the interest rate offered.

The payments on fixed rate fully amortizing loans are calculated so that at the end of the term the mortgage loan is paid in full. During the initial amortization period, a large percentage of the monthly payment is used for paying the interest. As the loan is paid down, more of the monthly payment is applied to principal.

If you have any additional questions, you can LIVE CHAT with one of our Franklin Advantage professionals. If you want to Apply Now, just follow the link to our Easy Application Page

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Balloon Loans

Balloon loans are short-term fixed rate loans that have fixed monthly payments based usually upon a 30-year fully amortizing schedule and a lump sum payment at the end of its term. Balloon loans often have terms of 5, 10 and 15 years.

The advantage of this type of loan is that the interest rate on balloon loans is generally lower than 30 fully amortized mortgages resulting in lower monthly payments. The disadvantage is that at the end of the term you will have to come up with a lump sum to pay off your lender. Most borrowers either refinance at the end of the term.

Balloon loans with refinancing option allow borrowers to convert the mortgage at the end of the balloon period to a fixed rate loan -- based upon the outstanding principal balance -- if certain conditions are met. If you refinance the loan at maturity you need not be requalified, nor the property reapproved. The interest rate on the new loan is a current rate at the time of conversion. There might be a minimal processing fee to obtain the new loan. The most popular terms are 5/25 Balloon, and 7/23 Balloon.

If you have any additional questions, you can LIVE CHAT with one of our Franklin Advantage professionals. If you want to Apply Now, just follow the link to our Easy Application Page

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Adjustable Rate Mortgages

Variable or adjustable rate mortgages (ARM) are loans whose interest rates and therefore, monthly payments fluctuate over the term of the loan. With this type of loan, adjustments based on changes in a defined index are made to the interest rate at interval defined in the note. The index for your particular loan is established in the note.

Well known ARM indexes include:

The margin is fixed percentage added to the index to calculate the interest rate. The result will then be rounded to the nearest one-eighth of a percent.

The margins remain fixed for the term of the loan and are not impacted by the financial markets and movement of interest rates. Lenders use a variety of margins depending upon the loan program and adjustment periods.

Most ARMs have an interest rate caps to protect the borrower from enormous increases in monthly payments. These periodic or adjustment cap limits how much your interest rate can rise at one time. Most also have a lifetime cap that limits the interest rate increase over the life of the loan.

Your mortgage disclosure will tell you the exact index to be used, the margin, and any periodic, adjustment or lifetime caps.

If you have any additional questions, you can LIVE CHAT with one of our Franklin Advantage professionals. If you want to Apply Now, just follow the link to our Easy Application Page

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Hybrid Loans

Hybrid loans, a combination of fixed and ARM loans, come in different varieties:

Fixed-period ARMs

With fixed-period ARMs homeowners can enjoy fixed payments for three to ten years before the initial interest rate change. At the end of the fixed period, the interest rate will adjust annually or semi-annually (depending on the terms in the note). Fixed-period ARMs 3/30, 5/30, 7/30 and 10/30 -- are generally tied to the one-year Treasury securities index. ARMs with an initial fixed period usually have first adjustment cap. It limits the interest rate you will pay the first time your rate is adjusted. First adjustment caps vary with type of loan program.

The advantage of these loans is that the interest rate is usually lower than for a 30-year fixed (the lender is not locked in for as long so their risk is lower and they can charge less) but you still get the advantage of a fixed rate for a period of time.

If you have any additional questions, you can LIVE CHAT with one of our Franklin Advantage professionals. If you want to Apply Now, just follow the link to our Easy Application Page

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Two-Step Mortgage

Two-Step mortgages have a fixed rate for a certain time, most often 5 or 7 years, and then interest rate changes to a current market rate. After that adjustment the mortgage maintains new fixed rate for the remaining 23 or 25 years.

If you have any additional questions, you can LIVE CHAT with one of our Franklin Advantage professionals. If you want to Apply Now, just follow the link to our Easy Application Page

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Buy Down Mortgage

A temporary buy down is the type of loan with an initially discounted interest rate which gradually increases to an agreed-upon fixed rate usually within one to three years. An initially discounted rate allows you to qualify for more house with the same income and gives you the advantage of lower initial monthly payments for the first years of the loan when extra money may be needed for furnishings or home improvements. To reduce your monthly payments during the first few years of a mortgage you make an initial lump sum payment to the lender. If you do not have the cash to pay for the buydown, the lender can pay this fee if you agree on a little higher interest rate.

A very popular buydown is the 2-1 buydown.

Example

If the interest rate on the note is 7% with a 2-1 buydown mortgage your initial discounted rate is 5%. You would have a 5% interest rate for the first year, 6% for the second year, and 7% for the remaining 28 years. You will need to prepay the difference in payments between the 5% and 7% rates the first year, and between the 6% and 7% rates the second year.

3-2-1 and 1-0 buy downs are also available, though less common. Compressed Buy downs work the same way, but with the interest rate changing every six months instead of on an annual basis.

A buydown may be used to qualify a borrower who would otherwise not qualify. Because the costs involved with obtaining a buydown loan it is common for the seller to pay all or part of the costs. The cost makes Buydown loans prohibitive for refinances.

If you have any additional questions, you can LIVE CHAT with one of our Franklin Advantage professionals. If you want to Apply Now, just follow the link to our Easy Application Page

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Convertible ARMs

Some ARMs come with option to convert them to a fixed-rate mortgage at designated times (usually during the first five years on the adjustment date), if you see interest rates starting to rise. The new rate is established at the current market rate for fixed-rate mortgages.

The conversion is typically done for a nominal fee and requires almost no paperwork. The disadvantage is that the conversion interest rate is typically a little higher than the market rate at that time.

If you have any additional questions, you can LIVE CHAT with one of our Franklin Advantage professionals. If you want to Apply Now, just follow the link to our Easy Application Page

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Graduated Payment Mortgages (GPMs)

Graduated payment mortgages have payments that start low and gradually increase at predetermined times. The lower initial payments allow you to qualify for a larger loan amount. The monthly payments will eventually be higher in order to catch up from the lower payments. In fact, your loan will be negatively amortizing during the early years of the loan, then pay off the principal at an accelerated pace through the later years.

Lenders offer different GPM payment plans, which vary in the rate of payment increases and the number of years over which the payments will increase. The greater the rate of increase or the longer the period of increase, the lower the mortgage payments in the early years.

If you have any additional questions, you can LIVE CHAT with one of our Franklin Advantage professionals. If you want to Apply Now, just follow the link to our Easy Application Page

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Payment Options

Fully Amortized Loans

The process of paying off a loan through specifically structured periodic payments is known as amortization. Mortgage payments are a common form of amortized loans, and interestingly enough, both the term mortgage and the term amortization find their meaning in the same root word "mort." This term means to deaden or kill, as in to "kill off" or eliminate the loan a bit at a time, via regular payments.

In an amortized mortgage loan, payments are usually the same amount each month with a fixed interest rate. In an amortized ARM the payments can change within the parameters of the note but as with all amortized loans, the loan will be paid in full at the end of the term.

If you have any additional questions, you can LIVE CHAT with one of our Franklin Advantage professionals. If you want to Apply Now, just follow the link to our Easy Application Page

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Interest Only Loans

Interest-only loans typically offer interest only payment options for the initial 5, 10 or 15. After this time, the principal balance is amortized for the remaining term. In other words, if a borrower had a thirty-year mortgage loan and the first ten years were interest only, at the end of the first ten years, the principal balance would be amortized for the remaining period of twenty years. The benefit is that the early payments (in the interest-only period) are substantially lower than the later payments. This gives the borrower more flexibility.

Interest-only loans are offered as on fixed rate loans and ARMs but most commonly available on Fixed-period ARMs. On fixed Period ARMs the interest only period usually corresponds to initial fixed term.

Interest-only loans represent a somewhat higher risk for lenders, and therefore are subject to a slightly higher interest rate.

If you have any additional questions, you can LIVE CHAT with one of our Franklin Advantage professionals. If you want to Apply Now, just follow the link to our Easy Application Page

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Negative Amortized Loans (Neg-Ams)

Negative amortization occurs whenever the loan payment for any period is less than the interest charged over that period so that the outstanding balance of the loan increases. The unpaid accrued interest is then capitalized monthly into the outstanding principal balance. The result of this is that the loan balance (or principal) increases by the amount of the unpaid interest on a monthly basis.

Neg-Ams also have what is called a recast period, and the recast principal balance cap is based on Federal and State legislation. The recast period is usually 60 months (5 years). The recast principal balance cap (also known as the "neg am limit") is usually up to a 25% increase of the amortized loan balance over the original loan amount.

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Reverse Mortgage

A Reverse Mortgage enables the homeowner 62 years old or older to convert part of the equity in their homes into cash without having to sell their homes, give up title, or take on a new monthly payment. The homeowner continues to pay hazard insurance and property taxes, live in and maintain their home.

The proceeds from a Reverse mortgage can be paid as a lump sum, in monthly payments or accessed on a line of credit. Reverse Mortgages are available as fixed rate and variable  rate loans. This loan does not require the homeowner to pay back the loan until they no longer live in the property.

If you have any additional questions, you can LIVE CHAT with one of our Franklin Advantage professionals. If you want to Apply Now, just follow the link to our Easy Application Page

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Second Mortgages

A second mortgage is a mortgage taken out on property that already has one mortgage. The term second indicates that the loan does not have priority on the property if it defaults. Instead, the first mortgage has priority and would be paid before any funds go towards the second mortgage.

Home Equity Line of Credit (HELOC)

HELOCs have a draw period, typically occurring in the first 10-15 years, with the remaining term on the loan referred to as the repayment period. During the draw period, you can draw out money on a revolving basis similar to a credit card without applying for a new loan, as long as the amount does not exceed the total amount of the original HELOC. During the repayment period you may be allowed to renew the credit line. If your plan does not allow renewals, you will not be able to borrow additional money once the draw period ends. Interest is paid only on the amount of equity you use.

If you have any additional questions, you can LIVE CHAT with one of our Franklin Advantage professionals. If you want to Apply Now, just follow the link to our Easy Application Page

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Closed End Fixed Seconds

A Closed End Fixed Second is a fixed mortgage rate loan. The rate and monthly payment will stay the same for the life of your loan. Loan terms can be anywhere from 5 to 30 years, but are typically 15 to 20 years. Unlike a HELOC, you get a lump sum for which you immediately start paying principal and interest. Because all second mortgages carry higher risk because they are priorized after the first, the rates are higher than first mortgages.

If you have any additional questions, you can LIVE CHAT with one of our Franklin Advantage professionals. If you want to Apply Now, just follow the link to our Easy Application Page

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CalHFA Seconds

The California Housing Finance Agency (CalHFA), established in 1975, is a completely self-supporting state agency that makes low-rate loans through the sale of tax exempt bonds and bonds that are taxable by the federal government. CalHFA has provides housing assistance with down payment assistance loans, the most notable being the California Homebuyer's Down payment Assistance Program, which contributes up to 3% home's value for closing costs or down payment assistance.

With and FHA concurrent first mortgage, the buyer is able to buy a home with only a one half percent down payment. The borrower must meet income limitations and still meet all FHA underwriting guidelines including credit, housing and debt ratios and income and asset documentation.

If you have any additional questions, you can LIVE CHAT with one of our Franklin Advantage professionals. If you want to Apply Now, just follow the link to our Easy Application Page

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