Home Loan
Buying a Home In The Hudson Valley
Ready to buy your first home in the Hudson Valley? Want to move to a larger home, a newer neighborhood, or across the country?
Whatever your plans may be, our Hudson Valley Community Bankers can help make the experience simpler and easier for you. We are a direct lender of a variety of home loans; additionally, we have access to a variety of lenders and a multitude of programs including first and second mortgage or home equity loans, construction, or investment properties.
Here you’ll find:
- Competitive low rates — to help you increase your purchase power.
- Government loan programs — including FHA , VA and USDA loans
- Expanded loan programs – low down payment options, first time homebuyers programs and more
- With Home Savings of America, you’re assured of home financing that fits your budget AND your needs. Plus we’ll give you confidence in your homebuying ability with our personal, friendly service that always puts your needs first.
Not sure how much you can afford? Use the calculator below…
There’s a lot to think about when buying a new home. How much to use as your down payment for instance, or credit scoring. Read on for more information
Low Down Payments and Mortgage Insurance
Simply put, mortgage insurance protects a lender such as Home Savings of America against financial loss if a homeowner stops making mortgage payments. Mortgage companies usually require insurance on low down payment loans for protection in the event that the homeowner fails to make his or her payments. When a homeowner fails to make the mortgage payments, a default occurs and the home goes into foreclosure. Both the homeowner and the mortgage insurer lose in a foreclosure. The homeowner loses the house and all of the money put into it. The mortgage insurer will then have to pay the mortgage company’s claim on the defaulted loan.
For this reason, it is crucial that the family buying the home can really afford it, not only at the time it is purchased, but throughout the time period of the loan.
Although the cost of the mortgage insurance is paid by the home buyer, or borrower, the mortgage insurer works directly with Home Savings. Mortgage insurance is available to commercial banks, savings & loans, and mortgage bankers, all of whom offer mortgage loans to home buyers.
Remember that mortgage insurance is not the same as credit life insurance, also called mortgage life insurance. This type of policy repays an outstanding mortgage balance upon the death of the person who took out the insurance policy.
The Secondary Market
The mortgage company’s decision to use mortgage insurance is driven by the requirements of investors in the mortgage market. Because of the losses that could occur, major investors require mortgage insurance on all loans made with low down payments.
The three primary investors in home loans are Federal National Mortgage Association (Fannie Mae), Federal Home Loan Mortgage Corporation (Freddie Mac), and Government National Mortgage Association (Ginnie Mae). By purchasing and selling residential mortgages, Fannie Mae and Freddie Mac help keep money available for homes across the country.
Unlike Fannie Mae and Freddie Mac, Ginnie Mae does not actually buy mortgages. It adds the guarantee of the full faith and credit of the U.S. Government to mortgage securities issued by mortgage companies.
The Two Choices: Government Insurance and Private Insurance
Low down payment mortgages can be insured in two ways: through the government or through the private sector. Mortgages backed by the government are insured by the Federal Housing Administration (FHA), the Department of Veterans Affairs (VA), or the Farmers Home Administration (FmHA).
Although anyone can apply for FHA insurance, the other two government mortgage guarantee programs are much more targeted. The VA program is limited to qualified, eligible veterans and reservists. This program is very specialized, so contact your Home Savings Community Banker for the details. The FmHA insures loans for the construction and purchase of homes in rural communities.
Obtaining conventional financing is the alternative to obtaining a home loan backed by the government. Conventional mortgages are all home loans not guaranteed by the government, including those guaranteed by private mortgage insurers.
Although government and private insurance are based on the same concept of allowing families to get into homes with less cash down, there are many differences between the two. Your Home Savings Community Banker can play an important role in suggesting and deciding which insurance is selected.
Home buyers must make a down payment of at least 5% of a home’s value to be considered for private mortgage insurance. However, under some special programs, the down payment requirement allows the buyer to use a gift or grant to cover 2% of the 5% down payment required by private mortgage insurers. The gift or grant may come from a friend, relative, community group, or other organization.
Private mortgage insurance is available on a wide variety of home loans and there is no preset limit on the loan amount. Although differences such as these may affect whether Home Savings and other mortgage companies prefer to work with government or conventional mortgages, your HSOA Community Banker will discuss which one would be better for your situation.
With the wide variety of loans available, home buyers have the freedom to choose the type of loan that best suits their needs. Early on in the home buying process, it is a good idea to meet with your Home Savings Community Banker to compare the types of mortgages they offer and shop for the best price and terms. Best of all, working with a mortgage insurer can be very easy, whether your loan is insured by the FHA or a private mortgage insurance company, because your Community Banker handles all of the arrangements.
By making lending money to home buyers safer, mortgage insurance helps more families get into homes of their own.
Credit Scoring – How it Works
Credit scoring is a statistical method that lenders such as Home Savings of America use to quickly and objectively assess the credit risk of a loan applicant. The score is a number that rates the likelihood you will pay back a loan. Scores range from 350 (high risk) to 850 (low risk). There are a few types of credit scores; the most widely used are FICO scores, which were developed by Fair Isaac & Company, Inc. for each of the credit reporting agencies.
Credit scores only consider the information contained in your credit profile. They do not consider your income, savings, down payment amount, or demographic factors like gender, race, nationality, or marital status. Past delinquencies, derogatory payment behavior, current debt level, length of credit history, types of credit, and number of inquiries are all considered in credit scores. Your score considers both positive and negative information in your credit report. Late payments will lower your score, but establishing or reestablishing a good track record of making payments on time will raise your score. Different portions of your credit file are given different weights.
They are:
35% – Previous credit performance (specific to your payment history)
30% – Current level of indebtedness (current balance compared to high credit)
15% – Time credit has been in use (opening date)
10% – Types of credit available (installment loans, revolving and debit accounts)
10% – Pursuit of new credit (number of inquiries)
The most important factor for a good credit score is paying your bills on time. Even if the debt you owe is a small amount, it is crucial that you make payments on time. In addition, you may want to keep balances low on credit cards and other “revolving credit;” apply for and open new credit accounts only as needed; and pay off debt rather than moving it around. Also don’t close unused cards as a short term strategy to raise your score. Owing the same amount but having fewer open accounts may lower your score.
Recent changes minimize the negative effects that rate shopping can have on a mortgage applicant. If there is a consumer-originated inquiry within the past 365 days from mortgage or auto-related industries, these inquiries are ignored for scoring purposes for the first 30 calendar days; then, multiple inquiries within the next 14 days are counted as one. Each inquiry will still appear on the credit report.
Every score is accompanied by a maximum of four reason codes. Reason codes identify the most significant reason that you did not score higher. The reason codes can help Home Savings or another lender describe the reasons for higher than expected rates or loan denial. Scores are not part of the credit profile and are not covered by the Fair Credit Reporting Act.
Your credit report must contain at least one account which has been open for six months or greater, and at least one account that has been updated in the past six months for you to get a credit score. This ensures that there is enough information in your report to generate an accurate score. If you do not meet the minimum criteria for getting a score, you may need to establish a credit history prior to applying for a mortgage.
If you’re ready to refinance your Hudson Valley home, or if you need our help figuring out if the time is right, please give us a call or drop us a line:
Kingston, NY 12401
Tel: 845-339-1341 email: bkatz@myhsoa.com
Home Savings of America
312 Wall Street
Kingston, NY 12401
Tel: 845-339-1341
Fax: 845-339-3310
