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2020-07-13
Home Mortgage
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Which Type of Mortgage or Loan is Right For You?

a beautiful home which could be bought with a home equity line of credit
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Considering your home loan or refinance options? There are several different types of mortgages and loans, so it’s an important decision you’ll want to get right. Whatever you decide, you can feel confident when you work with Academy Bank. With our mortgage service guarantee, we promise to close your loan on time or pay you $500*.

Ready to decide which type of loan or mortgage is right for you? Keep reading to learn about the differences and benefits of each option to determine which is best for your home and financial situation.

FHA Mortgages
A Federal Housing Loan (FHA) is a government-backed loan with flexible lending geared towards first time home buyers.

The federal government does not actually give out money for this -- instead, they act as a guarantor on the loan which your bank gives out, and which you pay for through your mortgage insurance premiums. The risk is lowered for your bank because the FHA will pay for the claim if you default on the loan.

Because of this, down payment rates can be as low as 3.5% in 2020. This works great for those with lower credit scores and limited funds.

Requirements and Qualifications include:
  • Down Payment - FHA loans require a minimum down payment of 3.5%.
  • Loan Amount - Maximum loan amounts vary by state and county. Call us at 855-376-3168 for details in your area.
  • Property Condition - FHA loans require homes to meet certain conditions and be appraised by an FHA-approved appraiser.
  • Property Ownership - New FHA loans are available only for homes that will be used as a borrower's primary residence.
Academy Bank’s dedicated loan advisor will be available to help you every step of the way should you choose this option.

VA Loans
A VA Loan is available to active service members, veterans, and surviving spouses through the Department of Veterans Affairs program. It’s designed to assist those who qualify to become homeowners. The VA has specific rules for this loan product.**

Academy Bank is recognized as an approved VA lender. Because we have VA Automatic Approval status, you can work directly with us rather than having to also coordinate with the VA.

These loans require no down payments and no mortgage insurance, and they work with flexible credit standards.

There are several types of VA Loans that may be available to you:
  • A VA Home Purchase Loan helps veterans purchase a home with competitive interest rates.
  • A cash-out refinance loan allows homeowners to borrow against home equity to make home improvements, or pay off debt. This builds on the previous mortgage.
  • The Native American Direct Loan Program helps Native American veterans become homeowners or improve their existing ones on federal trust land.
  • Interest rate reduction refinance loans (IRRRLs), or streamline refinance loans, allow borrowers to receive a lower interest rate by refinancing an existing VA loan.
Finally, there are adapted housing grants that help veterans with service-connected disabilities become homeowners or improve their existing homes to better suit their disabilities.

Conventional Mortgage
There are two types of conventional loans: a fixed-rate mortgage and an adjustable rate mortgage. Both are designed for borrowers with good or excellent credit.

A fixed-rate mortgage is best for those planning to stay in their houses for at least seven years. The amount of your principal plus interest will not increase for the duration of your loans.

Some of the benefits:
  • Your rate stays the same even if the mortgage rates go up.
  • Your monthly payment will be constant -- it’s easy to budget!
  • You can make early payments to pay it all off sooner.
An adjustable rate mortgage has a rate that fluctuates over time but only after a certain amount of time (five to seven years). Requirements include proof of income, assets and employment verification.

Some of the benefits:
  • The interest rate is fixed and often lower than other loans during the fixed period.
  • The payments are lower while your interest rate is still low.
  • There are rate caps to control how much your rate can increase.
It’s important to remember that any conventional loan cannot exceed $510,400 as of 2020.

Jumbo Loans
Jumbo Loans are for borrowers that are requiring funds that exceed the $510,400 cap to purchase or refinance a home. At Academy, we offer financing up to $3 million with competitive rates and flexible terms.

With these loans, qualification requirements (income, credit history, and assets) may be higher than normal loans. They may also require at least a 20% down payment.

Since there is more risk involved for the lender, there may be more stringent qualifications to be met for your debt-to-income ratio as well. Lenders prefer that your DTI is under 43%. The borrower must be able to prove they can meet the higher monthly payments.

Academy Bank is experienced in the world of Jumbo Loans and the complicated financial needs of its borrowers. So you can feel confident that we’ll help you through the entire process.

Your Loan Partner
We want to help you in your journey towards homeownership or exciting home improvement projects.

Check out our Monthly Payment Calculator to see your potential payment offerings for the loan amount you’re looking for.

Apply now! Academy Bank is here for you.

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Subject to credit approval
*Does not apply to Home Equity Lines of Credit or loans that require subordination of a second lien. $500 payment applied as a credit at closing. Please contact an Academy Bank Mortgage Loan Advisor for complete details.
**The VA has specific rules and qualification guidelines. VA funding fee applies. Contact an Academy Bank Mortgage Loan Advisor for complete details.