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What is a conventional loan?

Conventional loans are considered to be a more traditional mortgage product. There are different conventional loan types with various options. For example, there are "conforming" loans where the loan limits vary based upon the property location and there are "non-conforming" loans that allow higher loan limits. Conventional loans offer fixed rate loans where the payment remains the same while on adjustable rate loans the payment starts out lower and then can adjust according to the market. In general, conventional loans tend to have higher down payment and higher credit score requirements than government loans. The advantage is that these loans do not have upfront mortgage insurance and the monthly mortgage insurance is eliminated with 20% down.

When exploring loan types, let Gateway present you with a loan comparison to help you determine route that saves you money. Give us a call today!

FHA

The Federal Housing Administration, also known as "FHA," is a Government Agency who insures Loans that protect Lenders against losses in the event a homeowner experiences difficulties and defaults on their FHA Insured loan. The Lender's bear less risk because FHA will pay a claim to the Lender if the subject property is foreclosed upon. Have you seen a sign in window of a Foreclosed Property that states "HUD Home"? These properties were previous FHA Insured properties that HUD now owns and markets through designated Realtor Offices. FHA Insured loans are a continual growing market across the United States and a product offered by most Lenders. FHA loans are targeted towards first time homeowners and only require a 3.50% down payment. A Borrower must meet certain FHA Guidelines far as credit and income and meet ratio guidelines set forth by FHA. This is a smaller down payment than when you are applying for a conventional loan.

Whether you are a first time homeowner or looking to purchase another primary homestead, you may want to consider FHA as your option. This program is for everyone and striving to "Making Homes More Affordable and Attainable" in the current market.

VA

Veterans Administration, commonly known as VA, is a Government agency who insures loan programs that assist Veterans in financing a home under favorable terms. For VA home loan purposes, the term "Veteran" includes certain members of the Selected Reserves, Active Duty Service personnel and certain categories of spouses.

Typically, VA Loan Programs allow for 100% financing providing that the subject property is deemed of reasonable value, equal to or above the sales price. Most lenders offer VA loans up to a max loan amount of $417,000 including the VA Funding Fee. All VA loans include a VA Funding Fee that is based on the type of Military service, down payment, and whether or not they have used their VA Entitlement. If the Borrower is currently a disabled Veteran with documented evidence, they are typically "Exempt" from the VA Funding Fee.

VA also has limitations as to what the Lender and or Loan Originator can charge to the Veteran. For example, with a refinance, there are some non allowable charges that must be paid by the Seller or the Loan Originator. VA has set forth certain guidelines on credit and income as well as ratio and residual income depending on where you live and number of family members in the household.

Whether you are a first time homebuyer or looking to purchase another property and currently not utilizing your Veteran Entitlement, you may want to consider this 100% Financing VA loan Program.

ARMS

Gateway Mortgage groups offers both fixed rate and adjustable rate mortgages to our customers. What is the difference between the two?

A fixed loan has a fixed rate of interest each month that doesn't change for the life of the loan. The total payment remains the same which makes budgeting easier.

An adjustable rate mortgage (ARM) loan differs from a fixed Rate mortgage in that the payment can fluctuate over time at a scheduled interval. For example, if you decided to take advantage of a 7 year ARM loan, your payment would be fixed for 7 years and then would adjust based on an "index" set by the secondary markets. The advantage of an ARM loan vs. a Fixed rate loan is that the initial interest rate on an ARM loan is lower. Gateway offers 3 year, 5 year and 7 year arms for our conventional mortgage products. These loans can be beneficial, but are not for everyone.

When considering an ARM loan, make sure to first consult with a GMG loan officer. They will give you the pros and cons of such a transaction and to help you make the best decision.

Native American

Section 184 is a government-backed mortgage product designed exclusively for the underserved market of Native Americans to help them achieve the dream of homeownership. Native individuals who are enrolled in a federally recognized tribe, Tribes and Tribally designated housing entities are eligible for Section 184 loans. This program can be used to purchase new and existing homes, refinances and for the rehabilitation of an existing or purchased home.

Section 184's allow up to 150% of the current FHA loan limits. They do not have income restrictions and in some States, there are no location restrictions. Section 184's do not require monthly mortgage insurance which is probably the most popular benefit and is the main reason that the payments are almost always lower than the traditional loans. These loans do require a 1% loan guarantee fee that is paid to the government to back the loan; however, it is minimal compared to other products. The down payment can come from a gift from a family member or a grant from your tribe.

Gateway Mortgage Group is one among a select group of lenders that are approved to fund this loan. We have a dedicated staff specifically for Section 184 loans so that we can provide personalized service and quick turnaround times. Call us today and find out more about your mortgage loan opportunities.

Investments

Now is a great time to invest in real estate, with rates at all time lows it is cheaper to borrow money to purchase real estate now than it has been in decades. Due to the market being flooded with foreclosures all over the country real estate is "on sale". It makes sense to purchase a home when the price is discounted.

The media continues to report, "Demand for rental property is up", and thousands of families are searching for clean, safe, functional housing, as a real estate investor you can provide homes for these families as well as provide yourself with an income stream. A property purchased and managed properly will generate cash flow each month and put money in your pocket on a consistent basis.

We can provide financing for these properties on up to ten financed properties with reasonable down payments, the most attractive terms, and the lowest fixed and adjustable rates available.

Interest Rates and APR

The interest rate on your mortgage is one of three factors to determine the monthly principal and interest (P&I) payment of your loan. The other two factors are the amount of money borrowed (loan) and the repayment term (term) of the loan. Traditional terms are 15 and 30 years. A $100,000 loan with a 6.00% interest rate and 30 year term has monthly P&I payment of $599.55.

Borrowing money to purchase home generally requires the borrowers to incur expenses in addition to those of a cash buyer. Some examples are discount points, loan origination fee, lender's title policy, and mortgage insurance. Other items which may be required by the lender would generally be incurred by a cash buyer. Some examples are hazard insurance, appraisal, survey, and buyer's title insurance.

The annual percentage rate (APR) calculates the effective interest rate that the borrower pays for their loan after adjustments to the lender required fees. In the example above, the borrower received a loan for 100,000. If the lender requires a 1% origination fee and a 1% mortgage insurance, the amount borrowed for the APR calculation is $98,000. The APR is approximately 6.19%. The loan amount less lender's required closing cost, interest rate, and term determine the APR.

Closing Costs

During the initial phase of the loan process, you will receive a "Good Faith Estimate" of closing cost to be incurred at closing. The Good Faith document includes miscellaneous charges associated with the buying or refinancing a property. These charges can vary, however, most are standard.

There are two categories of closing costs:

• State and local government charges: These include city, county and state transfer taxes, recordation fees, and prepaid property taxes.
• Costs of getting a mortgage: These include title insurance, survey, appraisals, credit checks, loan origination and documentation fees, commitment and processing fees, hazard and mortgage insurance and interest prepayments.

At the closing table, you will receive the finalized list of charges. The final cost may differ due changes of circumstance in a loan. In general, the closing costs tend to be approximately two to four percent of the total sales price.

Points

A discount point is the fee charged by the lender to reduce your interest rate. A lower interest rate reduces your monthly payment. You should consider upfront cost paid to your lender to the monthly savings of the lower interest rate. A simple calculation is to divide the savings in your monthly payment by the amount you are paying to obtain the lower rate. To determine how many months it takes to get you initial cost back.

The result should be compared to the length of time you plan to pay on this loan. There are also income tax considerations and opportunity cost of your initial funds you should consider prior to determining which rate scenario is best for you.

Insurance And Taxes

When purchasing a home, your payment will include taxes and insurance if you choose a Government (FHA, VA or USDA) loan. Conventional loans will allow you to waive escrows (pay your taxes and/or insurance yourself), but there is typically a one-time fee. Most borrowers opt to have the taxes and insurance rolled into their monthly payment because it is easier to pay monthly rather than having to pay a large sum when they are due. All loans require hazard insurance but depending on the loan parameters and property locations, there may be different types of insurance required such as private mortgage insurance or flood insurance.

At closing, the lender will collect taxes and insurance and deposit in an escrow account. Your mortgage payment will include a monthly amount to cover the tax and insurances that will be paid out of the escrow account annually. Your payment may vary year to year based on the yearly changes in the tax and insurance amounts.

Step 1: Application

To apply for a loan online, simply click the 'Apply Now' button above! It only takes a few minutes to complete the necessary information to get you started. Upon completion, a Gateway mortgage professional will contact you for the next step. If you prefer, you can meet with a loan officer or visit one of our many branch locations and let them personally walk you through the loan application. Contact us at (918) 712-9000 and we will set up an appointment for you.

Step 2: Documentation

Upon initial application with a mortgage professional at Gateway, your Good Faith Estimate, and all other supporting disclosures will be provided to you within three business days. You can sign and return the documents via mail, in person, email or by using our digital signature service. With the digital signatures you will be guided through reviewing your documents on a secure website and digitally sign and print them with a click of a button. Your documents will instantly be available for your loan officer to process your loan.

In addition to the application and disclosures, we may request some of the following documentation:

At least 2 of your most recent paystubs (not necessary if self-employed)
Most recent 2 years tax returns, with all supporting schedules
Most recent 2 years W2s or 1099s
Most recent 2 months bank statements
Copies of your Driver's License (or Passport) and Social Security Card
Purchase
Complete Purchase Contract, signed by all parties
Refinance
Current mortgage statement
Pay history on current mortgage
Other documentation, as necessary

Step 3: The Appraisal Process

Appraisals are used to determine the fair market value of your home. Gateway uses an appraisal management company, Reliable Appraisal Management, in order to comply with HVCC and FHA's Appraiser Independence policies. These policies are designed to help prevent influence of value.

Reliable Appraisal will build a report starting with an inspection of the home and a comparison of other properties in the area that are actively listed or recently sold. Location, size, condition and amenities are also included in the report. Appraisers adjust for differences in features between the subject property and the selected comparable properties. These adjustments are determined through paired analysis. They reflect the difference a typical buyer would most likely pay for a certain amenity. Often the adjusted value of a particular feature will differ from its actual cost. For example, a swimming pool may cost $20,000 to install however the typical buyer may see only a $7500 benefit to a property having a pool versus one without a pool. In that case, a $7500 adjustment will be made in favor of the pool, not $20,000.

Once the report is complete, it will be reviewed and finalized by a certified appraiser from Gateway's Appraisal Department.

Step 4: Underwriting

Once your loan file has been prepared and all the specified documentation is in order, the Loan Officer can submit your loan to the Underwriting Department. The Underwriter will review the entire loan file and all the supporting documentation thoroughly and render a decision. Through this process, it is not uncommon for the Underwriter to request additional information. Once the Underwriter has reviewed and accepted the file and documentation, your loan will be approved and cleared for closing.

Step 5: Closing

When the Underwriter has approved your loan, the Closing Department will perform one last review. Once the review is finalized, they will prepare your closing documents for the title company. Our closing department will schedule a closing appointment with your title company to finalize the loan process. At closing, the title company will have you sign all the paperwork and the process is complete!. Congratulations on your new home!

Step 6: Servicing

Gateway Mortgage Group services over 95% of all our loans. This means that the company you worked with all through your loan process is the same company that will work with you after the loan process is complete. Most loans are retained "in-house" and the payments are made to directly to Gateway. Your payments can be made via mail, our website, or we can automatically withdraw your payments from your bank account. Because Gateway is the same company that worked with you through the entire loan process, you can count on us to provide you with any assistance necessary. We will provide such outstanding service that you can't help but tell your friends and family about us!