In the lending space, there are two distinct loan varieties. One of those is called a qualifying mortgage, which means that the loan conforms to government or conventional mortgage guidelines.  These loans are generally more stringent on the requirements of a borrower to qualify to repay the loan. The loan and the borrower must fit strict requirements set by the Consumer Financial Protection Bureau. The other type of loan is called a non-qualifying mortgage. These typically include portfolio loans or loan programs geared toward investors, self-employed borrowers, and non-US-citizens. The information used to qualify borrowers is different, and the requirements that lenders ask for are often different from qualifying mortgages as well. These requirements for non-qualifying mortgages are set by each individual lender who is approving or denying prospective borrowers. Velocity Lending is your local expert when it comes to non-qualifying mortgages, and we’re excited to help those who may not be able to qualify for traditional mortgages due to employment status, citizenship, or income.

There are abundant non-qm mortgage varieties. We can offer nearly ten varieties of loans that non-traditional borrowers can apply for.  These include programs for investors, non-citizens, self-employed borrowers, and more. They each will have different requirements for things like credit score, percent down, documentation and loan amounts. When you complete your application with us, we will collect relevant information to qualify you for loans and make notes of which programs will be the best fit for you. You will schedule a meeting with Josh or Dakota to go over loan options, monthly payments, and things you can do to improve or make changes to your financial picture. They will advise you on what the best choice is for your new home loan, explaining the pros and cons and the money involved. You will ultimately have the choice of what kind of loan program and what amounts you want to move forward with, as you are the borrower who is taking out the financing. Borrowers who do not qualify for “cookie-cutter” loan programs will often be offered non-qualified products to help them bridge that gap to homeownership. Read on to see if any of these loan types could help you in your unique financial situation.

• Bank Statement Mortgage
  • Self-employed borrowers
    • 660 FICO
    • 10% down
    • Up to $3mil, down to $150,000
    • 12- or 24-months business or personal bank statements
    • 2yr seasoning for foreclosure, short sale, bankruptcy, deed-in-lieu
    • 30-year fixed rate
    • 2yr self-employment required

• 1099 Income Loan
  • Self-employed borrowers
    • 660 FICO
    • 10% down
    • Up to $3mil, down to $150,000
    • No tax returns req
    • Most recent 1-2yr 1099 plus YTD earning statement
    • YTD earnings are verified from earning statement, paystubs, bank statements
    • 1099s must be from a single employer

• Investor Cash Flow
  • Property investors
    • 680 FICO
    • 20% down
    • Up to $1.5mil, down to $75,000
    • Qual based on property cash flow, min 1.15 DSCR- .80 max 30% down
    • No personal income or employment information required
    • Properties can be in LLC’s name
    • No limit on total number of properties

• Platinum Jumbo
  • “Just Missed”
    • 680 FICO
    • 10% down
    • Up to $3mil, down to $250,000
    • 4yr seasoning for foreclosure, short sale, bankruptcy, or deed-in-lieu
    • Owner-occ, 2^nd homes, non-owner occupied
    • Purchase and cash-out or rate-term refinance
    • Full doc only

• Portfolio Select
  • Full-doc product that offers borrowers all the flexibility, features, and benefits of non-QM programs
    • 660 FICO
    • 20% down
    • Up to $2mil, down to $125,000
    • 1yr seasoning for foreclosure, short sale, deed-in-lieu
    • 2yr seasoning for bankruptcy
    • Purchase, cash-out, rate-term refinance
    • Owner-occupied, 2^nd homes, investment properties

• Asset Qualifier
  • High net worth & significant assets
    • 700 FICO
    • 25% down
    • Up to $3mil, down to $250,000
    • No employment, no income, no DTI
    • Rates are 30yr fixed
    • 5yr seasoning foreclosure, short-sale, bankruptcy
    • Primary residence only

• Foreign National
  • Foreign National clients can purchase an investment property in the US
    • No foreign or us credit need
    • 20% down
    • Up to $1.5mil, down to $75,000
    • DSCR program with 1:1 ratio on cash flow
    • Assets sourced and seasoned for 60 days
      • Must be in a US FDIC insured bank for a min of 30 days
    • 12 months reserves required
      • Must be in a US bank

• Agency Mortgage
  • Conventional mortgage solutions for quick closing
    • 660 FICO
    • 5% down
      • With MI
    • Up to conforming limits
    • Owner-occ, 2^nd homes, investment
    • Competitive pricing with quick turn times

Velocity Lending is your local expert on non-QM mortgages. We are here to help you achieve the goal of homeownership regardless of your financial situation. If you don’t see a loan program on here that you are able to fit into, we have other options that we can explore with you as well. Please don’t hesitate to reach out to us if you have any questions or want to talk more about non-qualified mortgages or anything else. We are here for you!

The post Non-Qualified Mortgage Loan Options appeared first on Josh Lyon Team at Velocity Lending.

Are you 62 or older and living on a fixed income or need a lump sum of money for a large expense? Do you need a line of credit without accumulating more debt? A reverse mortgage may be the answer for you. Homeowners that are 62 years of age or older and have considerable home equity can apply for a reverse mortgage, which lends money from the home’s equity until the time of the borrower’s death or move from the home. At settlement, the home will be sold to recoup the balance that was given through the home equity. Most lenders will require at least 50% equity before considering approving a reverse mortgage. The proceeds from the reverse mortgage are not taxable, as the IRS considers this money to be a loan advance.

Reverse mortgages can provide cash in hand to seniors who are financially struggling with their fixed income, or their net worth is tied up in their home’s equity. One thing to be immediately aware of is that these loans can be costly and are often subject to scams. When it comes to a reverse mortgage, instead of the homeowner making payments to the lender, the lender makes payments to the homeowner. The homeowner can choose to get these payments in a large variety of ways, and the interest of the loan is calculated into the loan amount, so the borrower doesn’t have to pay any costs for the duration of the reverse mortgage. Over the loan’s lifespan, the borrower’s debt will increase, and the home equity will decrease. The home is the collateral for the reverse mortgage, as is the case with forward mortgages (regular home loans). In this case, however, the home is sold upon the owner’s death or move, and the proceeds will to go the lender to pay for the reverse mortgage principal and associated fees accrued over the term of the loan. Any sale proceeds more than what is owed to the lender will go to the owner if still living, or the estate if not. In some cases, the estate may be allowed to pay off the loan balance to keep the home.

There are some broad requirements for reverse mortgages to be approved. The biggest one is the borrower must be 62 years of age or older. The second being that they must own a home, condo, or townhome built after 1976. The home must have at least 50% equity. The borrower will be liable for an origination fee, mortgage insurance, loan servicing fees and interest. There are no income or credit score requirements, but the above points are mandatory across the board. The U.S Department of Housing and Urban Development (HUD) also requires all applicants to complete a HUD-approved counseling session detailing the pros and cons of reverse mortgages with the borrower’s unique situation taken into account. The borrower must keep current on property taxes, homeowner’s insurance, and keep the home in good condition. If the borrower stops living in the home for any reason longer than a year, the loan will come due and need to be repaid. This is usually accomplished by selling the house.

Let’s dive more into the different types of reverse mortgages. The most common type is a HECM, or a home equity conversion mortgage. HECMs make up almost every single reverse mortgage below about $750,000 in home value. If the home is worth more, however, borrowers may be eligible for a jumbo reverse mortgage, which will not going to have limits on the home’s value. Jumbo reverse mortgages are also referred to as proprietary reverse mortgages. There are also different disbursement methods or ways for borrowers to receive the money from their home equity. One is a lump sum, which is essentially just how it sounds. The reverse mortgage is disbursed in full, with a fixed interest rate. This will be the one and only time the money will be given, as it is the whole sum of the mortgage. This is also the only type of disbursement with a fixed interest rate. An alternative to this is in equal monthly payments as an annuity. If at least one borrower lives in the home as their primary residence, the lender will be obligated to make equal monthly payments to the borrower. This can also be referred to as a tenure plan. Additionally, term payments can be made, which is going to be equal monthly payments for a set period of the borrower’s choice. Also, borrowers can receive the money as a line of credit. This will allow them to take out money as needed, and interest is only paid on the amount taken out from the loan. There are a couple ways to combine these payments, as well. One is equal monthly payments plus a line of credit, which disburses a set monthly amount with no end date for the borrower, and makes a line of credit available to them as well. The other method is term payments plus a line of credit, which is like above but does have a certain end date on those monthly payments. The line of credit will be available for the life of the loan on either combined loan program. In some cases, it can also be possible to use a reverse mortgage to buy a different home than the one the borrower is living in, and this is called a HECM for Purchase or a Federal Housing Administration Reverse Mortgage.

There are both pros and cons that occur with reverse mortgages. A reverse mortgage can help seniors who have no liquid assets to regain some cash in their pocket, especially in cases where their home is the only thing they can borrow against. This can help to fund basic living expenses for seniors who are in a tough spot due to fixed income and inflation, or any other number of things. This way, the senior can continue to live in their home AND afford their basic needs without concern of bankruptcy. However, taking out a reverse mortgage means spending a large chunk of your accumulated home equity on fees and costs, including interest. The borrower will probably not be able to pass down the home in their estate, especially if the heirs cannot afford to buy out the reverse mortgage to regain the property after death or move. The other big issue that presents is the length of time the HECM could disburse. If the borrower selects any options with a line of credit, there is a risk that they could prematurely spend all the money and not have anything else to borrow from if they need it cash. The borrower could also outlive the term that they set up payments for, again putting them in a tough spot financially with no other assets to borrow from.

Reverse mortgages are a unique way to provide homeowning seniors some extra income, either through monthly payments, a lump sum, or a line of credit. Get in touch with us today if this is something that could help you, your family member, or someone you know. We understand it can be very tough to balance inflation with a fixed income and we are always here to help.

The post Reverse Mortgage appeared first on Josh Lyon Team at Velocity Lending.

Are you a first time homebuyer that is curious about how to get financing to buy a home? Velocity Lending is here to explain how to get preapproved for a home loan and what the steps are in the process. We’re your trusted local mortgage broker and we’re ready to help you take the first step toward buying a home.

The first step is completing an application.  To do this you have 2 options. You can call our office and speak with our preapproval specialist, Omar or you can complete our online application, which is going to consist of the same questions and information, but in a self-completed format. The application will ask you for personal information, like your name, birthdate, social, contact information and other necessary identifiers. It’s also going to ask about your estimated credit profile, and whether we are authorized to complete a credit check. You will additionally be asked to provide information about your employment and assets, commonly referred to as “income.” Last but not least, you will give an idea of current debts and financial obligations. When you complete this process with us, you can feel confident that your information will stay private and protected, as our online application is through a secure portal and any physical notes or documentation is uploaded to our secure server and destroyed in a secure shredding facility.

Once you complete your application, you will be asked to submit documents to verify the information you provided in your application. These will range from your tax documents, like your W2, employment documents, like paystubs, and asset documents, like bank statements. Dakota, our loan manager, will look over your application, your credit profile, and your documents to determine a preapproval amount. He will draft a preapproval letter to send to your real estate agent to submit when you make an offer on a home. He will also, of course, let you know that number so you know what to be looking for.

At this point, you will come into the office and have a meeting with our Loan Officer and branch manager, Josh. If you’re unable to come into our office, we can also do these meetings virtually. Josh will go over your different loan options, monthly payments, and what you can do to improve that number if need be. You can ask any of your questions at this time, or at any time in the process.

Once you’re armed with information and home financing, it’s a great time to pick an agent if you haven’t already. The team at Velocity Lending knows many amazing agents if you need help choosing one! Once you have an amazing agent, a fantastic lending team, and all the facts you need to be successful in your home buying experience, you are ready to find and make an offer on a home. Your agent will help you search for homes, go to showings, and complete the necessary paper on the real estate side, and the Velocity team will be here to help get you through to the closing table (& beyond!) with your home financing.

If you’re ready to take the first step to buy a home, please give us a call and we will be happy to help you get started. Omar is waiting for your call! 970-460-6677

Online Application

The post The Preapproval Process appeared first on Josh Lyon Team at Velocity Lending.

Buyers and sellers are required to pay closing costs when they come to the closing table to sign documents and give money for the sale or purchase of their new property. These are costs of verifying and administering ownership and financing for the property. These costs will be paid to the title company at the time of closing with a wire transfer or a cashier check. It’s important to understand what costs you may incur during the process of your real estate transaction. Velocity Lending is your local expert on helping you get the lowest costs associated with your home purchase.

Closing costs are going to be shown on the Loan Estimate as well as the Closing Disclosure. They’ll also be shown on your Settlement Statement that you get from the title company at closing. You will sign these documents at various times throughout the process of being under contract and at closing to acknowledge the costs and fees associated with the sale or purchase of your property.

The buyer tends to have a larger list of things that they pay for at closing, whereas sellers only pay for a couple things. The seller is going to be responsible for paying prorated taxes for the time they spent owning property for the year, and a lot of times, they will pay the transfer taxes and the real estate commissions. Buyers have a long list of things they will pay for at closing. Some of these costs can be rolled into the loan amount but it will increase the total loan amount and you will end up paying more interest on the life of the loan. For financing, FHA loans will have a 1.75% upfront premium payment, USDA loans will have a 1% upfront guarantee fee, and VA loans will have between 1.25-3.3% guarantee fee. These fees are going to be a percentage of the loan amount and will be paid to the corresponding entity. Buyers are also responsible for paying an appraisal fee, inspection fee, recording fee, underwriting fee, credit report fee, title fee, flood certification fee, property taxes, title insurance, homeowner’s insurance, home warranty, and prepaid interest. They may pay for discount points and a mortgage insurance premium as well. On the next section, we will go more into detail on each of those fees.

Appraisal Fee: This is a fee that goes to the appraiser. They are hired by the lender to verify that the subject property is worth less than what they are lending on the transaction. This fee will be around $600 but could be more depending on the property.

Credit Report Fee: This is a fee that goes to the broker for the cost of running a credit report. This fee is typically about $40.

Discount Points: Borrowers can buy down their rate by prepaying a portion of the interest at closing. For every 1% of interest that borrowers prepay, their interest rate will decrease by .25%.

Escrowed Property Taxes: This is a lump sum that will be paid into an escrow account for property taxes to be taken out twice a year. Generally, 6 months will be paid into the escrow account at closing.

FHA Upfront Premium Payment: The Federal Housing Administration charges 1.75% of the loan amount at closing.

Flood Certification Fee: This is a fee paid to certify that the subject property is not in a flood zone.

Home Warranty Charge: This is a charge for home warranty insurance, which covers unexpected failures to major systems and appliances. This is optional and not always selected. It is going to be about $500.

Inspection Fee: This fee is paid to a home inspector who will check the state of the property. This is going to be about $300.

Mortgage Insurance Premium: If the down payment on the home is less than 20% of the purchase price, mortgage insurance will be required to be paid at closing.

Prepaid Interest Charge: Prepaid interest is the amount the borrower will pay at closing to pay the loan up through the first payment, which will fall on the first of the following month.

Prorated Property Taxes: The seller will pay taxes at closing for the time they spent in the property for that portion of the tax year.

Real Estate Commission Fees: The seller typically pays both the buyer and seller’s real estate commission fees. These can range from a total of 3%of the purchase price up to 6% or more.

Recording Fee: This fee is paid to the county recorder to record a new deed with the change of ownership at the sale. This will be about $20.

Stamp / Transfer Tax: This is a fee paid to transfer ownership of the property. This fee is 0.02% of the purchase amount.

Title Fee: This is a fee paid to the title company for the research they execute on the property’s title and deed. These will be in the range of 0.19% of the purchase price.

Title Insurance: This protects the buyers if there are any problems with the title before or after closing. This will be between 0.5 and 1% of the home price.

Underwriting Fee: This is a fee paid to the underwriter on the lender’s team to verify and research the approval for the home financing. This can be anywhere between $400-$900.

USDA Upfront Guarantee Fee: The U.S Department of Agriculture charges 1% of the loan amount for USDA loans.

VA Guarantee Fee: The Veteran’s Administration charges a fee of 1.25-3% of the loan amount for VA loans.

There happen to be a big handful of costs that come along with real estate transactions. It’s important to understand what these costs are and who they are paid to. Velocity Lending is your local expert mortgage broker who is here to help you understand the costs of your home financing and get you the lowest fees and rates. Call us today if you have any questions, comments, or need to get preapproved for a home loan!

The post Closing Costs appeared first on Josh Lyon Team at Velocity Lending.

Have you been thinking about buying your first home or moving up into a bigger or nicer one? Do you know how much you’re going to put down, or what programs you can qualify for with that down payment? Velocity Lending is your local home loan expert and we’re here to shed some light on down payments for home loans. We’re going to go over the least possible and the average down payment, as well as all the different program requirements to qualify for certain types of mortgages. The down payment you make on your home will impact what loan programs you qualify for, as well as your monthly payment.

To begin, we’re going to explain what a down payment is. This is going to be the amount that you invest initially into your home when you go to closing. Some loan programs will allow you to invest $0 into your home, and we will get more into these options later. Some loan programs are going to require 3%, 5%, 15% or even 25% of the home price as a down payment. The national average down payment is around 12%, so for a home with a $400,000 purchase price, you’re going to be putting about $48,000 into the home at closing.

Now, let’s get into the down payment requirements for different loan programs. Conventional loans are going to allow for a 3% down payment if you are a first-time homebuyer. However, if it is not the first time you’ll be purchasing a home, you’re going to have to put down 5%. FHA loans are going to allow buyers to put down 3.5% down. If you were or are a member of the military, you can get into a home loan with 0 down. And, if you’re looking at rural areas, you can apply for a USDA loan that asks for 0 down as well.

Overall, buyers have a wide range of options for how much they need to put down on a home. Speak with a knowledgeable, local mortgage broker at the Velocity Lending office to help you figure out with program will work best for you and your goals today. We’re here for you!

The post Down Payment on a Home appeared first on Josh Lyon Team at Velocity Lending.

Many people may think that owning their first rental property is far in their future. However, with the expanse of products and the dedication of Velocity Lending, this can become a reality more easily than you thought! We’re here to help you build wealth.

The simplest way to get a rental property is to “Move Up” and turn your current home into a rental property. To do this, you must qualify for a new primary home. You will need to show employment history for the past two full years, or if you’re self-employed, you’ll be asked to provide your last two years of tax returns. Your credit will also be pulled, to determine your credit score and assess the debts you are responsible for. To get the best rate for your new home loan, your credit score should be at least 740. However, Velocity Lending can help borrowers with credit scores down to 600. Your mortgage broker will ask about your assets as well, like how much money you have in your accounts, and where the down payment funds will be coming from. These funds could come from your bank accounts, your retirement accounts, a gift from an immediate family member, or a HELOC on your current home. You can expect to put a minimum of 5% down on your new purchase.

The next step in the process is to start shopping for a new home! Since you will be “Moving Up” you need to find a home that is bigger, nicer, etc… Your trusted, local real estate agent will be a huge asset in helping you find this perfect property. While you’re looking for homes, you will want to get a full year lease in place for the home you will be vacating, and deposit a check for the lease prior to closing.

When you go under contract on your new home, we will submit your executed lease paperwork as well as a bank statement showing the funds towards the lease deposited, and they will be able to write off 75% of the tenant’s monthly payment from your debt-to-income ratio. To give some numbers to the situation, if your current mortgage is $1,750 and you charge your tenant $2,000 for their monthly rent, you will only be liable on your debt-to-income ratio for $250 for that mortgage.

There are huge benefits to owning a home, especially when you can own more than one. The appreciation of the home’s value will build over time. To give perspective on this, we historically are looking at 6 percent appreciation on residential real estate. On a $350,000 home, in one year, you would’ve gained $21,000 in equity. That’s what makes now (and truly, any time)  the perfect time to jump in and gain some of that appreciation on both your current and your new home. Another added benefit is the cash flow that comes from the rental property. These profits will vary depending on many factors, but if you take the time and work with the right real estate team, you should be able to have some money in your bank account specifically from that rental property at the end of the year.

The final and most important piece of ease in owning a rental property is working with the right people. When you choose a trusted, local mortgage broker, they are going to educate you on the best ways to build wealth in real estate. They are going to make sure that you are in the best situation with the right loan and the right pricing for your financing. They are going to work with you long-term to help you continue to achieve your goals, no matter what it takes. The Velocity Lending team is going to make sure that the deal gets done with speed, excellence, and unbeatable customer service each and every time you trust us with your home financing. We’re available 60+ hours a week and always happy to answer your questions or run numbers on your potential new home. We are here for you!

The post It’s Easier Than You Think to Own a Rental Property! appeared first on Josh Lyon Team at Velocity Lending.

For starters, let’s discuss what a mortgage rate is. “Rate” is the simplest way to describe the percentage of interest you will be responsible for on your home loan. Mortgage interest rates fluctuate based on several things. One of these is they abide by the law of supply and demand. The more people who want to buy a house, the more demand there is for mortgages, and rates rise to profit from this need for home financing. When the market slows down, and a smaller number of people are needing home loans, rates fall to entice people to get a mortgage.  Another thing that affects mortgage rates is inflation. Because inflation devalues the US dollar, it devalues everything that is purchased with US dollars, such as homes. The state of the bond market, as well as the housing market, can affect rates as well.

At this point, there’s a good chance you’re wondering, “What can I do to get a better rate for my loan?” Despite all the external circumstances that dictate mortgage rates, there are a few things you can do as a borrower to get different interest rates. First and foremost, working with a trusted mortgage broker is going to help you find the right rate and product for your unique situation. They are going to do the shopping for you to look at several different lenders and the pricing and rates they are offering for your home loan. Rates for borrowers are calculated based on economic health, credit score, the purpose of the home purchase (owner-occupied, second home or investment), and the loan amount. Another way a borrower can try to get a better interest rate is by having a good credit score. We can lend to people with as low as a 580 credit score, but to be eligible for the best rates available, you’ll want to be around 740. You can also invest more initially into the property with a larger down payment or buy discount points to bring your rate down further. On the flip side, you also could increase your rate to cover closing costs, if cash flow is an issue.

Now that you are armed with an understanding of how mortgage rates work, let’s work on getting you into a new home or building your investment portfolio. With rates still at a historic low, it’s a great time to get a home loan. We’re here to help!

Click Here to request a quote!

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