Au Courant Residential Mortgage Solutions is Valencia, California’s premier mortgage company. We service all of Southern California and provide the best home loan mortgage tools available on the Internet — easy, convenient, and all mortgage forms are on-line for the best California loan mortgage programs and current rates available. We also offer free calculators including mortgage, APR, debt reduction and more to help you get a mortgage loan in California. Together with the assistance of our experienced loan officers, we will guide you through the often confusing process of choosing and getting the exact California home loan mortgage to meet your specific needs.
Residential Loan Programs
FHA Loans
Home ownership rates in America continue to increase at a steady rate due in a large part to the implementation of FHA home loans more than seventy years ago. Over the years, FHA has helped Americans gain the financial independence that comes with owning a home. By creating jobs and reasonable mortgage rates for the middle class, financing military housing, and producing housing for the low income and the elderly, FHA has helped Americans become some of the best housed people in the world with over 73 million Americans currently owning their own homes. Statistics show that by 2005, home ownership rates in the US have climbed to 69 percent.
How It Works - By serving as an umbrella under which lenders have the confidence to extend loans to those who may not meet conventional loan requirements, FHA's mortgage insurance allows individuals to qualify who may have been previously denied for a home loan by conventional underwriting guidelines.
FHA loans benefit those who would like to purchase a home but haven't been able to put money away for the purchase, like recent college graduates, newlyweds, or people who are still trying to complete their education. It also allows individuals to qualify for a FHA loan whose credit has been marred by bankruptcy or foreclosure.
Nuts and Bolts - The most popular FHA home loan is the 203(b). This fixed-rate loan often works well for first time home buyers because it allows individuals to finance up to 97 percent of their home loan which helps to keep down payments and closing costs at a minimum. The 203(b) home loan is also the only loan in which 100 percent of the closing costs can be a gift from a relative, non-profit, or government agency.
Insurance on FHA mortgages are often rolled into the total monthly payment at 0.5 percent of the total loan amount which is roughly half of the price of mortgage insurance on a conventional loan. After five years or when the loan balance reaches 78 percent, the additional mortgage insurance is typically met and therefore drops off the total monthly payment.
Guidelines - It is not necessary to meet a minimum income requirement in order to qualify for a FHA loan but debt ratios specific to the state in which the home will be purchased have been put into place to prevent borrowers from getting into a home they cannot afford. This is done through a close analysis of income and monthly expenses.
FHA Rehabilitation 203(k)
You've found the perfect home: a fixer-upper in a nice neighborhood. The house needs a fair amount of work, but you don't mind putting in the sweat equity. So you go off to your friendly local bank to get a mortgage, and you hit a wall of frustration.
Your banker is not impressed with your claims that this $75,000 house has the potential to be a $150,000 home with some repairs. Your bank won't lend you money to buy the house until major repairs are complete. but you can't begin repairs until you've bought the house. If you buy the house with a standard 15 to 20 percent down-payment, then you won't have the money you need to make repairs.
This catch-22 situation is common when homeowners try to purchase a house that needs repairs, says the U.S. Department of Housing and Urban Development. HUD's Rehabilitation 203(k) program was developed with this situation in mind. The program isn't without its costs -- both in paperwork and in slightly higher interest rates and closing costs -- but it may be the path to homeownership, especially if you are a first-time buyer or have little cash for a down-payment.
HUD's 203(k) program allows you to purchase or refinance a property, and include in the loan the cost of making the repairs and improvements. These loans generally take longer to approve than conventional loans, up to 90 days. Available through approved mortgage lenders nationwide, 203(k) loan are available to any purchaser with enough income to make the loan payments. Approved lenders will help you with the paperwork, and HUD also has consultants available to help you with paperwork and estimating.
The mortgage amount is based on the projected value of the property, including work needed to complete the renovations. Part of the mortgage is used to pay the seller for the purchase. The money for estimated repairs is placed into an escrow account and may be drawn in up to five increments as rehabilitation work is completed. 203 (k) rehabilitation loans carry interest rates one-half percent higher than conventional 30-year-fixed loans, but that cost is offset by the low down payment requirement -- about three percent of the acquisition and repair costs of the property.
Mortgage proceeds must be used in part for rehabilitation and/or improvements to a property. There is a minimum $5,000 requirement for the eligible improvements on the existing structure(s) on the property. Rehabilitation or improvements to a detached garage, a new detached garage, or the addition of an attached unit(s) (if allowed by the local zoning ordinances) can also be included in this first $5,000.
FHA Refinance Programs
FHA Streamline Refinance mortgage programs can be a great asset to homeowners today that want to lower payments or get out of an adjustable rate mortgage. FHA loans have always been a great option with very low interest rates. Streamline refinancing can only be used on a current FHA insured mortgage. They can be done with or without an appraisal and with or without credit qualification. The streamline refinance does not typically allow for any cash back to the borrower. The 203(b) FHA Fixed Rate Mortgage Loan Program is the widely used FHA home loan, especially among first time home buyers. The 203(b) FHA loan keeps your down payment to a minimum. Your closing costs may also be reduced. The 203(b) FHA loan will finance up to ninety-seven percent of your loan. You must qualify with some debt-to-income ratios, but the 203(b) does not have a minimum income requirement. Check with a financial planner about your debt to income ratio, or discuss your financial status with a lender. Find out how to maximize your credit rating before you apply for your FHA loan.
Homeowners enjoy the benefits of investing in their property year after year. For some, there comes a time when that investment can come in handy. Refinancing with an FHA loan can prove to be an effective way to put that equity to work.
Sending a child to college, consolidating bills, taking a much needed vacation, or making home improvements are some of the ways homeowners tap into the equity they have accumulated in their home to help with these expenses. Keep in mind that FHA refinancing is only available to homeowners who are currently using their home as their principal residence.
FHA offers several different options to homeowners who are considering an FHA refinance mortgage:
FHA REFINANCE: CASH OUT REFINANCING - This refinancing option is especially beneficial to homeowners whose property has increased in market value since the home was purchased. A Cash Out refinance allows homeowners to refinance their existing mortgage by taking out another mortgage for more than they currently owe, therefore repaying their current mortgage and using the equity they have built up in their home to take out another larger mortgage. This allows the homeowner to access the equity they have built up in their home and put it to good use where needed.
In order to get the most benefit from refinancing your mortgage, it is often best to consider refinancing after you have had time to build up a significant amount of equity in your home. If the property was purchased more than one year prior to the refinance, the homeowner can refinance the existing mortgage for up to 85 percent of the appraised value plus the allowable closing costs, which vary from state to state.
FHA REFINANCE: STREAMLINED REFINANCING BASICS - This refinancing option is considered streamlined because it allows you to reduce the interest rate on your current home loan quickly and oftentimes without an appraisal. FHA Streamlined Refinance also cuts down on the amount of paperwork that must be completed by your lender saving you valuable time and money.
In order to qualify for a Streamlined Refinance your original home loan must be an FHA loan in good standing and the refinance must lower your monthly interest payments. This type of refinancing option reduces your monthly expenses by lowering your payments but there is no option to receive cash back. This works well for people who are in good financial standing with no significant debt because it allows you a little extra money each month that can be put to good use elsewhere.
FHA Secure Refinancing
The Federal Housing Administration (FHA) was established in 1934 to offer mortgage insurance on loans through FHA-approved lenders. The FHA insures mortgages on single and multi-family homes, and other approved purchases such as manufactured homes. The FHA does not issue the loans themselves, but FHA mortgage insurance is quite attractive for a prospective lender because FHA mortgage insurance protects the lender's investment. Should a homeowner default on the mortgage or go into foreclosure, the FHA pays the lender.
Loans insured by the FHA feature low down payments, and costs for FHA mortgage insurance are built into the mortgage payment. Those costs disappear five years into the loan or when the loan reaches 78% of the property value (whichever is longer).
Many homeowners with adjustable rate mortgages find themselves in financial trouble because of current interest rate increases. Foreclosure is a bigger threat than ever, but fortunately the FHA has stepped in to help with FHA Secure Refinancing. Starting July 14, an expanded FHA Secure refinancing plan allows homeowners who have missed up to three mortgage payments in the last 12 months under certain circumstances to avoid foreclosure with FHA Secure.
You don't need an existing FHA home loan to qualify for an FHA Secure refinance loan - the program is designed to specifically help those without FHA loans to get lower payments, prevent default and foreclosure, and protect their investment.
• Homeowners with current or delinquent non-FHA adjustable rate mortgages are eligible.
• You are not automatically disqualified based on delinquency on your current loan.
• You must have a dependable income and be able to make your mortgage payment.
• If you are in default, you must show delinquency or default is the result of increased interest rates and the resulting higher mortgage payments.
• If you are current on your mortgage payments, any type of conventional loan is eligible for FHA Secure refinancing.
In addition to these specifications;
• Those who are current on mortgage payments can refinance non-FHA fixed rate or adjustable rate mortgages. Those who are behind on their mortgage payments may only refinance adjustable rate mortgages.
• Borrowers may be required to verify their mortgage payment history through the mortgage servicer or with cancelled mortgage payment checks.
• "Cash out refinancing" is not eligible under FHA Secure.
FHA Secure refinancing is available for single-family or multi-family homes and manufactured homes. A new FHA premium pricing plan goes into effect on the same date the expanded FHA Secure refinancing program begins, July 14, 2008. Borrowers should know this "second chance" refinancing does not indicate relaxed requirements for credit. Borrowers applying for FHA Secure are subject to the same requirements as any other applicant for an FHA loan. Delinquency issues for mortgage payments aside, loan officers still require proof you are a good credit risk. Borrowers should:
• Have steady income from a dependable source.
• Show a reliable payment history on other debts.
• Have a debt-to-income ratio below 41%.
• Have a credit score appropriate for any home loan.
If you are need further explanation of the terms or conditions of FHA Secure, be sure to ask your Loan Officer for clarification before you sign.
FHA Reverse Mortgage
Established in 1934, The Federal Housing Administration (FHA) offers mortgage insurance on loans through FHA-approved lenders. The FHA provides this coverage for single and multi-family homes, and other approved purchases. The FHA does not issue loans, but FHA mortgage insurance is quite attractive for a prospective lender.
The main reason for this is simple; FHA mortgage insurance protects the lender's investment should a homeowner default on the mortgage. Loans insured by the FHA feature low down payments, and costs for FHA mortgage insurance is built into the mortgage payment. Those costs disappear five years into the loan or when the loan reaches 78% of the property value (whichever is longer).
An FHA reverse mortgage is designed for homeowners age 62 and older. It allows the borrower to convert equity in the home into income or a line of credit. The FHA reverse mortgage loan is also known as a Home Equity Conversion Mortgage (HECM), and is paid back when the homeowner no longer occupies the property.
There are requirements for an FHA-insured reverse mortgage or HECM;
• The loan is based on the age of the youngest borrower if there are co-signers.
• Homeowners are required to get consumer counseling and education before a HECM loan is approved.
• Borrowers must own and live on the property as the primary residence.
Unlike other FHA loans, there are no income or credit qualifications for this type of loan. You will be required to have a current appraisal on the property as the amount of an FHA reverse mortgage is based on the home's value or the FHA insurance limit, whichever is lower. The FHA reverse mortgage:
• Is a loan based on current interest rates.
• Allows closing costs to be financed in the reverse mortgage.
• Is for single-family homes or up to a four-unit home, but must be occupied by the borrower.
• Is also permitted for FHA-approved condominiums and manufactured homes.
FHA reverse mortgages or HECM loans require the home to conform to FHA property standards and flood requirements. The FHA reverse mortgage has a variety of ways the borrower can receive the money including monthly payments, a line of credit, or combinations of payments and credit. The borrower does not pay on these loans until the house is sold. The loan is repaid from the proceeds of the property sale including interest. Any remaining equity in the home after the loan has been repaid belongs to the homeowner.
If there is not enough money from the sale of the home to repay the loan in full, FHA insurance is used to pay the difference. If you need further clarification of the details of an FHA reverse mortgage, ask your loan officer to explain before you sign.