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Traditional Residential Financing

Traditional home loans involve mortgage loan products that have set the standards for the mortgage industry. Major providers of funding in the mortgage arena have been organizations such as Fannie Mae (FNMA), Freddie Mac (FNMC), the Federal Housing Administration (FHA), and the Veterans Administration (VA).

FNMA "Fannie Mae" . . .

FNMA is the largest purchaser of conventional mortgages in the nation. As a major facilitator of funding, Fannie Mae is able to provide the most attractive and diverse financing in the marketplace. Vision Mortgage Company, Ltd. offers all of the Fannie Mae loan programs. We encourage you to visit their Web site for more information about their exciting programs. Here is some general information about FNMA loan products for your consideration:

Loan Limit $417,000: The maximum mortgage that FNMA will allow is $484,350 (Single Family $484,350; Two-Family $620,200; Three-Family $749,650; Four-Family $931,600). This amount is commonly referred to as the "conforming loan limit". Please note that there is no maximum sales price.

Ratio: The term "ratio" refers to the idea that the house payment, or, the house payment plus all other monthly debts, should not exceed a percentage of the homeowner's gross monthly income. For example, if a ratio of 28/36% is required, this would mean the house payment could not exceed 28% of the homeowner's gross monthly income, AND, the house payment plus all monthly debts should not exceed 36% of the gross monthly income. Please check with your loan officer because most Lenders that your broker will deliver will allow a second ratio of 45% depending on FICO scores and file factors.

Qualifying Guidelines: For loans with 5% or less down payment, you can expect ratios of 28/36%; all other programs allow for expanded ratios depending on customer criteria and compensating factors. Automated processing has allowed for ratio exceptions that far exceed these numbers.

Product Diversity: When it comes to available loan products, FNMA has truly been responsive to the demands of the home buying public. Whether you want to limit your investment under their 5% down payment program or whether you are looking for an adjustable rate mortgage with an option to convert to a fixed rate, FNMA can provide an answer. It is estimated that in the heyday of loan product demand, FNMA approved over 700 different financing programs.


FNMC "Freddie Mac" . . .

Freddie Mac is another large national mortgage conduit. It was originally formed to meet the secondary marketing needs of savings and loan institutions. This was accomplished this by allowing financial institutions in less capital intensive areas like the mid-west states to invest in real estate mortgages throughout the country. Freddie Mac and Fannie Mae mirror each other in many respects. There are however certain attributes that remain true to only Freddie Mac. Your Vision Mortgage Company, Ltd. loan officer will insure that your conventional loan quote is appropriately designated.

Federal Housing Administration (FHA) . . .

The Department of Housing and Urban Development (HUD) supervises the activities of the Federal Housing Administration (FHA). The FHA has long been recognized as having set many of the standards in the mortgage industry in the United States. With its beginnings in the National Housing Act of 1934, FHA instituted safeguards that kept a watchful eye on discriminatory lending practices. Moreover, it created the Mutual Insurance Premium (MIP) program.

The MIP insurance program allows lenders to fund a greater percentage of the sales price of a property with the assurance that the funds are insured against loss. The cost of this insurance typically added to the loan balance after the minimum down payment calculation has been made. The approximate minimum down payment on an FHA loan is 3.5%. The amount of the MIP that is added back to the loan is 1.75% for loans greater than 95% loan to value (30 year fixed rate loans) [4/1/2013]. In addition to the "One-Time" MIP, a monthly MIP figure is required. This monthly amount comes to approximately 1.35%, (divided by 12 for monthly). An example might be as follows (rate is subject to change unless otherwise committed):

Sales Price Loan Amount Loan with MIP Principal + % at 5% 30-Year Loan Estimated Monthly MIP Estimated Taxes + Insurance Total Monthly Payment Total Down Payment
$50,000 $48,250 $49,938.75 $256.01 $56.18 $149.96 $462.15 $1,750


FHA Loan limits for Bexar County:
Single-Family $359,950
Two-Family $460,800
Three-Family $557,000
Four-Family $692,200


Veterans Administration (VA) . . .

The final sector in the Vision Mortgage Company, Ltd. traditional home loan tour deals with the Veteran's Administration (VA) guaranteed mortgage. The Servicemen's Readjustment Act of 1944 opened the door to home ownership for millions of American by facilitating a "zero down payment" program. Lenders could guarantee a certain percentage of the loan they were creating. With that guarantee, and within certain program limits, the VA allows qualified veterans to borrower up to 100% of the sales price of the home they were purchasing.

In the past, VA loans were restrictive in that the VA set the maximum interest rate a veteran was allowed to pay. Other restrictions pertaining to appraisal orders, and subdivision, builder and condominium approvals have also relaxed somewhat. Like the FHA, the VA has a fee that is assessed for the privilege of using the VA program. The fee is called a VA Funding Fee. The VA Funding Fee is based on a strata which pertains to the veteran borrower's era and time of military service and/or whether or not the veteran is using these benefits for the first time. The most typical VA funding fee is associated with a first time benefits user on a purchase-money mortgage. The current VA Funding Fee for Active Duty military placing ZERO money down and who are using their VA home entitlement benefits for the first time is 2.15% (1/1/2013); subsequent loan use is 3.30%. Ask Armando to verify this amount specifically for your transaction. Note that the Funding Fee is waived by VA for certain levels of disability.

While some restrictions apply, sellers are also allowed to pay the entire borrower's closing costs and prepaid items (i.e. prepaid insurance, taxes, and interest). The VA mortgage continues to be the appropriate choice for the qualified homebuyer who wants to leverage, or otherwise limit, the investment in purchasing a home.

The Veterans Benefits Act of 2004 was signed by President Bush on December 10, 2004. The law changes the maximum guaranty amount of $60,000, for certain loans in excess of $144,000, to an amount equal to 25 percent of the Freddie Mac conforming loan limit determined under section 305(a)(2) of the Federal Home Loan Mortgage Corporation Act for a single family residence, as adjusted for the year involved. To illustrate, the maximum guaranty for 2005 would be $89,912. This is 25 percent of the 2005 Freddie Mac conforming loan limit for a single family residence of $484,350. The new VA limit without a down payment has been changed to $484,350 for all Texas properties. Contact us for more information and how to qualify accordingly.

Vision Mortgage Company, Ltd. can arrange for interim construction financing with either of these financing mediums. Ask Armando to set up a time to discuss your custom home options.

Rate Reduction Refinances:

If you own a home (whether you are occupying that home or not) that is financed under a VA guarantee, you may be eligible to reduce your interest rate and payment under Vision Mortgage Company's VA Rate Reduction program. I can calculate your savings over the telephone.

Texas Veterans Loan Program:

The Texas Veterans Land Board offers eligible veterans below market, fixed rate financing for home purchase of construction, land acquisition, or home improvements. I can assist you with your application and help determine if you qualify for this very special financing program.

For more information, visit this valuable link:

Texas Veterans Land Board

Texas Dept of Savings & Mortgage Lending Recovery Fund Notice

These materials are not from HUD or FHA and this document was not approved by the Department or Government Agency.
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Vision Mortgage Company, Ltd.
In the Lincoln Center Building at Callaghan and I.H. 10 West
7800 I.H. 10 West, Suite 112 ~ San Antonio, Texas 78230-4768 ~ U.S.A.
Office: 210.348.0077 ~ Fax: 210.348.0542 ~ Cellular: 210.823.LOAN (5626)
Residential Mortgage Loan Originator NMLS ID# 340140
Company NMLS ID# 338634


Vision Mortgage Company is in the Lincoln Center, I-10 at Callaghan in San Antonio, Texas.

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