SCALING
THE
MORTGAGE MOUNTAIN
The market is a mountain. Altitude and terrain, ice falls and avalanches — but a summit that is well worth the climb. While the journey upward to the joy of owning a home is all your own, there is no question that no one can go it truly alone. Just as Sherpas shepherd adventurers to mountain peaks, buyers also need a hand to lay a path and point out pitfalls, opportunities and details they might not otherwise know to look for in their climb to the top. At Orlando-based Shelter Mortgage, loan officers do just that, playing the role of guide.
A Climbing Checklist Before the climb, you need to prepare. Just as Mount Everest explorers research conditions and terrain, you will do the same, with your loan officer there to guide you.
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Take stock of your assets. For climbers, that is not just their luggage. It is their limitations and their strengths. Take the time to review your financial situation, especially the size of your down payment, debt-to-income ratio and credit history. These numbers make up your buying power and will impact the types of financing you will be able to secure.
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Work on your financial fitness. As you become aware of your buying power, you may notice some areas you can improve to increase your odds of making it into the home of your dreams. Your mortgage lender is the perfect trainer in this fiscal conditioning. In a review, your lender might see opportunities you have missed — a chance to raise your credit score, increase your income or any other aspect that could increase your buying power.
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Get to know your terrain. Is it a buyer’s or a seller’s market? What is the average price in your area? This is where your lender’s experience and expertise are invaluable. While conducting your own market research is empowering and recommended, no one knows the market better than the professionals making the trek through the thick of it every day. They know what questions to ask and where the opportunities lie, and they are ready to share with you.
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The Routes Now that you have your bearings, it’s time to pick your route. There are so many different types of loans available to buyers — some unknown to most borrowers. Your lender can help you choose the ones best suited for you, but here is a brief overview:
Government Loans These loans, subsidized by the government and the Federal Housing Administration, are among the most common home loans and include:
FHA loans: Popular among first-time home buyers, these loans have a smaller down payment and allow for a lower credit score than others.
VA loans: These loans, specifically for veterans and their families, allow for zero down payment and 100% financing.
USDA loans: Offered through the U.S. Department of Agriculture, USDA loans allow for lower insurance fees and no down payment.
Private Lender Loans: Conventional Offered by private lenders, these meet the Fannie Mae and Freddie Mac loan limits. While the qualifications for these loans are stricter, including higher credit scores and a larger down payment, they can allow for reduced or no mortgage insurance.
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Private Lender Loans: Unconventional If the loan needed exceeds the limits set by Fannie Mae and Freddie Mac, buyers may want to apply for what is known as an unconventional loan.
Jumbo loans: In the past couple of years, jumbo loans have seen an increase in popularity. These loans cover any amount over the conventional loan limit of $484,350. These often require a larger down payment, usually anywhere from 5% to 10%, as well as a low debt-to-income ratio and a high credit score. While interest rates for these loans in the past have been on the higher end, in recent years they have seen a bit of a decrease. Documentation is also often required with these, including two years of tax returns and proof of reserves, or money left over after the down payment is made.
Adjustable vs. Fixed Rate Loans Each of the above loan types will most likely be offered with the option of either adjustable or fixed-rate financing. Which is best for you will depend on the size of the loan, the length of time you plan to stay in the home, and your predicted income.
Fixed rate: A loan with a fixed rate will have the same interest rate for the duration of the loan.
Adjustable rate: The interest rate on an adjustablerate mortgage (ARM) changes at a specified time after an initial “fixed” period. For example, a 5/1 ARM is fixed for five years and then adjusts in year six. There are a variety of ARMs to choose from, including 5/1, 7/1 and 10/1, depending on your financial need.
Portfolio Loans Portfolio mortgages are loans that are originated by a lender and then held for the life of the loan, kept in the lender's portfolio rather than being sold on the secondary market. Shelter’s Smart Series mortgages provide a wide range of options, such as bank statement programs for the self-employed, investor solutions using cash-flow qualification, and derogatory housing/credit event solutions. Shelter Mortgage accommodates first-time homebuyers and seasoned homeowners alike in financing or refinancing a new home, second home, or investment property.
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KENT WINKELSETH
Vice President, Orlando Branch Kent Winkelseth has been a mortgage professional for over 20 years, with experience in every facet of the industry. From the first steps toward buying a home to reviewing the best loan options for each client to processing applications, Winkelseth and his team at Shelter Mortgage’s Orlando offices bring their combined experience and up-to-date financial knowledge to every homebuyer they help. As vice president, Winkelseth leads his team with an emphasis on thorough, honest and constant communication to create and build trust — helping every builder, buyer and seller feel confident in their future. ©️ 2019 Shelter Mortgage Company, L.L.C. All Rights Reserved. This communication does not constitute a commitment to lend or the guarantee of a specified interest rate. All loan programs and availability of cash proceeds are subject to credit, underwriting and property approval. Programs, rates, terms and conditions are subject to change without notice. Other restrictions apply. Shelter Mortgage Company, L.L.C, 4000 W. Brown Deer Road, Brown Deer, WI 53209. Corp NMLS#431223 (www.nmlsconsumeraccess.org). Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act. GA - Georgia Residential Mortgage Licensee #35660. IL - Illinois Residential Mortgage Licensee. Additional licenses available at www. sheltermortgage.com. Shelter Mortgage Company LLC, 408 East Ridgewood Street, Orlando, FL 32803. Kent Winkelseth – FL/#LO17485; NMLS #552527