What Type of Loan is Best for Me??

What's HOT in loans- Interest Only (I/O) loans have gotten very popular in Colorado. I
heard through the "grapevine" about 50% of all loans in CO are I/O Loans. These loans allow buyers
to purchase homes that cost more, which buyers would not normally qualify for. So, a buyer may want/
qualify for a $1800 payment and a purchase price of $300,000 under a "normal loan"...but with an
I/O loan those buyers can purchase a $360K with the same payment. How do these I/O loans work??

You don't pay principal on the loan.......so you borrow $300K.....and after 5 years you still owe $300K.
Buyers look for an increase in value and appreciation on their home under these loans, which normally
here in CO, that's not a problem. NOW.....keep in mind you can pay more per month and apply that
towards the principal if you wish, it's totally up to you.

CONVENTIONAL – loans are the best loans, in terms of interest rates and fees. Borrowers need
fairly good credit to be approved for a conventional loan. The money saved for the down payment and
closing costs has to be seasoned in your bank account (in your account for at least 2 months) showing
those funds are yours, and not gifted from a relative. There are some conventional loans where a relative
can gift the money needed at closing, but the credit for the borrower has to be very strong. You will need
at least 5% down plus closing costs with a conventional loan. I also offer a 3% down conventional loan, but
again the credit for the borrower has to be very strong. (I know how to decrease closing costs)

FHA – loan is a great loan, if there are some credit issues, such as late payments, or if there is higher debt.
If you lack established credit, FHA, may approve you. I would assist you in gathering alternative
credit documentation. This consist of contacting anyone you may have credit with such as, the telephone
company, cable company, Public Utilities, your insurance agent ,etc. anyone that can say you have paid
your bills on time. There is a 1.5% MIP funding fee (MIP, Mortgage Insurance Premium) with every FHA
loan that is added to your loan amount.  Homeowners are able to get that fee refunded back if they opt to
sell their home, or refinance their loan. This fee is prorated, depending on when you sell, or refinance.  FHA
loans require only 3% down, plus closing costs. (I know how to decrease closing costs)

VA – loan is a great loan for veterans of the armed forces. If structured properly the VA loan is the only
loan (besides my unique No Money Down Loan) which allows buyers to close on a house with NO MONEY
needed. Like FHA, loans, there is also funding fee with all VA loans, which is 2% of the loan. If a veteran
has used his or her benefits, the funding fee is increased to 3%, the next time they use their benefit. Having
credit established is not as important on a VA loan, VA will not deny a veteran based on there is not
enough credit established. If the veteran does not have credit established, I try and line up alternative
credit documentation. This consist of contacting anyone you may have credit with such as, the telephone
company, cable company, Public Utilities, your insurance agent ,etc. anyone that can say you have paid
your bills on time. You need 0% down with a VA loan if structure properly.


NO MONEY DOWN LOAN
is a great loan for buyers if cash flow is tight, or maybe you
simple want to hold on to their money.  This is a very unique loan and needs to be structured properly. I
have closed over 25 homes with this loan over the last 3 years. There are a few investors that offer
this program and will borrow 100% of the property with one loan. This loan does require MI,
(mortgage insurance), please read below about MI. I have other investors that will issue two different
loans, one at 80% LTV, (loan to value) and the 2nd mortgage at 20% LTV for a combined CLTV of 100%.
There is no MI with these investors, rates vary from 8% - 10% for the first mortgage, and 9.5% - 16%
on the second mortgage. The 80%-20% program is a locked in interest rate for two years, after which
I will refinance you into a conventional loan. Based on values continuing to increase here in CO, I
typically can refinance you into a conventional loan, and structure it so it doesn’t require you to
bring any money to closing. This is a great loan which allows people to buy a home and start building
equity.

JUMBO – loans are for loan amounts over $252,700.00, you will need at least 5% down plus closing costs.

STATED or NO INCOME VERIFICATION are loans which do not need to verify income, or
assets, or employment. We simply list on the loan application what income you make, and they don’t verify
it. This is a great loan for self employed persons where they make more money than their tax returns shows.
Another situation where you may use this loan is the spouse does not have strong credit so we can’t use
them on the loan, so we exclude them but will use their income. I have investors that will borrow 100%
for a purchase using this loan. Typically borrowers need 5% to 10% down plus closing costs.


MI – (mortgage insurance)
is a fee added to your monthly payment unless you have 20% equity. MI
is a worthless fee to the homeowner, there is no tax advantage with MI, as opposed to paying interest which
offers a substantial tax advantage. VA and the No Money Down Loan (80%-20% loan) are the only loans
that don’t require MI unless you have 20% down. R&S Mortgage Inc. does knows how to structure a
owner occupied loan with only 10% down, and not pay MI.

FIRST TIME HOME BUYER/CASH ASSISTANCE programs exist, how does 6% interest
locked in for 30 years sound, and have 2% of your closing costs paid! Or, have 5% borrowed to you to
pay back over 10 years at 3% interest. That 5% can be applied to your down payment as well as your
closing costs. We have the resources, you need to call anyone of our team members for more information.
Generally there are income limits, such as with CHAFA (CO housing & Finance Authority) has income
limits of: 1 person - $39,000.00 – 2 person - $49,300.00 – 3 person or more - $56,695.00. 

ADJUSTABLE RATE (ARMS) – are loans that typically have lower interest rates, which will
adjust (usually upward) at predetermined times. These loans can adjust at the 1, 3, 5 or 7 year mark. There
are times when ARMS are a good option, maybe you plan on moving, or there is a payroll increase which
will help offset the higher payment when the payment goes up. R&S Mortgage Inc. will be more than happy
to sit down and explain the different loan options and determine which loan would be most beneficial to you.

R&S Mortgage Inc. is a mortgage broker, which means we shop many different investors for the best
programs and rates. We are not tied down to rules, as with many other financial institutions are. When
you have R&S Mortgage Inc. process your loan, you will deal with a professional staff that knows how
important your loan is. All information is kept confidential, and we always promote the client to call us,
during the day, at night, or on weekends if you have questions.

                                        R&S Real Estate Services Inc. & R&S Mortgage Inc.
                                                       P.O. Box 29608 - Thornton, CO 80229 
                                                   303-912-5113 fax 866-613-9498 toll free 
                             e-mail: randy@realtymortgage.net - www.realtymortgage.net