Federated Lending Corporation

Fixed-Rate Mortgages

If you feel more comfortable with a mortgage that has the same monthly principal and interest payment for the life of your loan, you should consider a fixed-rate mortgage. Federated Lending Corporation offers terms of 7 through 30-years. Popular terms are 10, 15, 20 and 30. Ask a loan officer for a personalized quote for any term.

Adjustable-Rate Mortgage

If an initially lower interest rate and lower monthly payments appeal to you, think about our adjustable-rate mortgages (ARMs). As interest rates rise and fall, the interest rate on these loans also rises and falls. Federated Lending Corporation offers a 6-month and 1-year adjustable in varying loan amounts. We also have combination mortgages that combine the low introductory payments of an adjustable-rate mortgage with the stability of fixed payments in the first few years. You may want to consider a 3/1, 5/1, or 7/1 combo loan. After a fixed payment in the first 3, 5 or 7 years, your loan converts to a 1-year adjustable, with a rate change every year thereafter. To protect you against sharp rate increases, FLC ARMs feature yearly and lifetime interest rate caps.

Combination Mortgage

Combination mortgages are loan programs that combine the low payments of an adjustable rate mortgage with the stability of a fixed-rate mortgage during the initial years of the loan. Statistics show that most homeowners have their mortgage loans an average of seven years before moving or refinancing. This means that a “combination” mortgage may provide a cost savings to many home buyers who might not even be considering these alternative financing vehicles. Combination mortgages fall primarily into two categories: The 3/1, 5/1 and 7/1 mortgages begin with a fixed rate during the initial payment period. At the end of the 3-, 5- or 7-year period, the loan automatically becomes a 1-year adjustable. The initial rates on these combination loans are lower than the rates on a fixed-rate mortgage but higher than a 1-year adjustable. Their advantage over the 1-year adjustable is the length of time (3, 5 or 7 years) that they provide payment stability. The 5/25 and 7/23 loans are excellent options for buyers who know they will move after an initial five- or seven-year period, or who don’t mind refinancing if they later change their minds about selling. Although the initial term is short, the payments are amortized over 30 years, so with a start rate lower than the regular 30-year fixed rate, buyers can save money. At the end of the initial period, the unpaid principal balance of the balloon note is due as a lump sum on the balloon maturity date. If the borrowers have decided not to move, they may choose to exercise their conditional refinance option which would convert the loan to a 25-year or 23-year fixed-rate mortgage.

FHA Mortgage

FHA (Federal Housing Administration) mortgages offer low down payments and income, asset, and credit qualifying criteria that may be more attractive to buyers whose mortgage needs fall within the FHA regional loan limit guidelines. An FHA mortgage is assumable under certain conditions, so you may be able to offer it to future buyers – making it an attractive selling feature.

Sampling of loan limits for FHA loans (One-family effective 1/1/2014 by county)

Bucks, Chester, Delaware, Montgomery, Philadelphia, and York $379,500

Northampton, Lehigh, Carbon $372,600

Adams, Cumberland, Dauphin, Lebanon, and Perry $271,050

Call us for other county limits

FHA is a fixed-rate or adjustable-rate program with a minimum down payment of 3.5% percent of the purchase price. Because qualifying ratios are more lenient, you are able to be approved for a larger loan amount with less income. All of your closing costs may come from a gift or up to 6% from the seller. There are loan amount limitations that vary by region across the nation.

VA Mortgage

VA (U.S. Department of Veterans Affairs) mortgages often require no down payment and are available to eligible military personnel and members of the National Guard, veterans, and widows or widowers of veterans.

To qualify, you must obtain a Certificate of Eligibility from your local VA office. If you are not sure whether or not you are eligible, contact your local VA office — or call a FLC loan officer to assist you.

With a zero down payment on VA loans, which are fixed-rate only, and a higher qualifying debt ratio, this loan makes home ownership a reality for men and women who serve and have served our country. All of the closing costs may be paid by a third party, including the seller.

Balloon Mortgages

The balloon loan is typically amortized over a standard fixed rate mortgage period but has a shorter maturity. At maturity, the loan generally needs to be paid off, with some loans having a conditional option to refinance. These types of loans are for people who know that they will only be in a home for a set number of years (5, 7 and 15 years are the most common) and are usually amortized over a 30 year period. These loans carry interest rates that are less than the 30 year rate.

One-Time Close Construction/Permanent Loan

If a home buyer is working with a general contractor (builder) to construct a home, the builder may require partial payments prior to the final completion of the home. This program allows a home buyer to build a home and permanently finance the home with one closing. This results in one application, one closing, assurance of permanent loan prior to construction, and a reduction of closing costs.

No income verification loans

Unfortunately, most of these loans are no longer available. Government regulations related to the mortgage crisis of 2007-2009 have stopped the offering of any of these programs. Although some self-employed borrowers may benefit from No Income Verification mortgage loans, no lender is willing to take the legal risk. In the future, there may be an alternative for people who have legitimate reasons but until then , lenders are responsible to verify the ability for a customer to repay their loans.

Reverse Mortgages

See our separate web pages devoted to Reverse Mortgages, CLICK HERE to go to our Reverse Mortgage Pages.

1. When should I lock in? Should I lock in?

This is up to you, the borrower. Interest rates can fluctuate throughout each business day. Many borrowers start the loan process without locking their interest rate, but will be subject to any pricing changes due to market conditions until they do. If you are more comfortable locking in at the time you apply, by all means do.

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2. Do I have to pay discount points?

No in all cases. A discount point is equivalent to one percent of the loan amount and is commonly used to lower the interest rate and is usually optional. We suggest that the borrower calculate the savings to insure it meets their needs. Ask you loan officer for help with this. Federated Lending does not require the borrowers to pay discount points on most of our financing programs.

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3. How do I reduce the amount of my closing costs?

Many closing costs such as appraisals and title company fees are determined by the third-party companies that provide these services. Title insurance costs are regulated by state governments. Actual lender charges can be reduced by paying a higher interest rate. This may offer some tax advantages for the you.

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4. What is PMI?

Private Mortgage Insurance enables you to purchase or refinance with less than 20% equity.

PMI protects the lender. If the property is abandoned or goes into foreclosure, this policy protects some of the value of the home. This policy is usually required if the LTV, (loan-to-value), is greater than 80%. Lender paid PMI is also available. Consult your Federated Lending Corporation loan representative to help you make the right choice for your situation.

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5. Why do I have to establish an escrow account?

Although many lenders require an escrow account for real estate taxes and insurance, there are also exceptions. An escrow account can be waived if the loan amount is not more than 80% of the value of your home. If you bought the home within the last year, then use the sales price or the appraised value — whichever is lower. There is sometimes a fee for the waiving the escrow account.

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6. Can my loan be sold?

Yes, and most loans are sold on the secondary market. In some cases the borrower is not aware of the sale because the servicer of the loan remains unchanged. The sale does not affect the terms of your note.

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7. What can I do if I don’t think I have enough cash?

A Federated Lending Corporation mortgage representative can help guide you to the most prudent use of resources. An example of a typical question is whether to pay off credit cards or to save the cash to be verified as cash reserves. Since there are many aspects to each person’s financial situation, not all decisions can be categorized and displayed in a table.

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8. What is APR (annual percentage rate)?

We are required by federal law to express the cost of credit as an annual rate. APR is a tool for comparing rates and charges among different lenders.

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9. How is the equity in my home determined?

Equity is the difference between the amount owed on a home and its market value. An opinion of market value is established by a licensed appraiser.

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10. What is the difference between “closing” and “escrow”?

In some states, the consummation of a real estate transaction is called “escrow.” In other states this same process is called “closing.” Both terms mean that all funds are safeguarded (escrowed) by a reliable third party. This third party can be an escrow agent, title company, or an attorney. When all documents and funds are received, escrow is closed and funds are dispersed and title is transferred and recorded.

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Dick was able to help me with my mortgage when my husband and I were going through a divorce. During a very difficult time for me, Dick was able to work through the differences and problems I was having. He was able to get my mortgage closed in a very quick time which was essential for me.

Carla, Ambler, Pa

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Andy helped me save money. My local bank (large bank) was .25% higher and they acted like they were doing me a favor talking about loan programs. They were very helpful and the process was smooth.

Ed J., Levittown, PA

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WOW – Was I surprised. I never knew a mortgage loan officer could be so helpful. Tom reviewed my refinance and while reviewing our mortgage application and property information, he recommended we apply for a tax reassessment. He told us how to do it and sent all the links and paperwork for us to fill out. We saved $4,042 per year in taxes and even more with the new lower rate.

Marc R., Upper Makefield, PA.

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