Mortgage Programs

Not all mortgage loans are the same — and choosing the right program can make a significant difference in your payment, qualification, and long-term financial flexibility.

This section covers the most common and specialty mortgage programs available to homebuyers and homeowners, including:

FHA Loans
VA Loans
USDA Loans
Conventional & Jumbo Loans
HomeReady & Home Possible
Down payment assistance programs
Washington State Housing Finance Commission (WSHFC) programs
Specialty programs for medical professionals and unique scenarios

Understanding eligibility guidelines, loan limits, credit requirements, and program benefits allows you to compare options strategically rather than relying on headlines or general advice.

As a Mortgage Advisor with over 25 years of experience, I help clients evaluate which program best aligns with their income, assets, and long-term plans.

Explore the programs below to better understand your options.

I Love Checking Out ARMs: Reviewing An Existing Mortgage

April 15, 2008 by Rhonda Porter 1 Comment

Recently a friend approached me confessing to having one of those "awful adjustable mortgages"…she thinks she needs to refinance and take advantage of today’s lower rates. Before assuming that someone "needs" to refinance, I like to review their current mortgage and what their financial goals are. Sometimes, people do not need to refinance…they just need to understand their mortgage terms.

Current Mortgage: P&I Payment $3,330 (original balance $520,000).

7/1 Adjustable Rate Mortgage: Note Rate 6.625%
Caps: 2/2/5
Margin: 2.25
Index: 1 Year LIBOR (currently 2.637% as of this the date of this post).

There is approx. 65 months remaining with the fixed period rate of 6.625% before the mortgage adjusts. When the mortgage adjusts, the new rate will be 2.25% plus the current 1 year LIBOR rate EXCEPT the rate will be no lower than 4.625% and no higher than 8.625% due to the 2% adjustment cap.

Best case scenario at first adjustment date with current mortgage:

Rate: 4.625% with principal and interest payments for 12 months of $2,780. Note: If the mortgage was adjusting today, the rate would be closer to the best case scenario at 4.875% (2.25% plus 2.637% = 4.887% rounded to the nearest 0.125%). Alas…they have 65 more months before knowing what the going rate for the 1 Year LIBOR will be.

Worse case scenario at first adjustment date with current mortgage:

Rate: 8.625% with principal and interest payments for 12 months of $3,937.

Possible scenarios that I suggested:

Refinancing into a conforming-jumbo mortgage 30 year fixed at 6.375%. This would provide a principal and interest payment of $3,232. With closing costs at $2900, they will break even on this scenario in 30 months. From 30 months (the break even point) to when the fixed period of the ARM is over, the savings based on the monthly payment would be $3430.

Restructuring the existing mortgage into two mortgages with a conforming first at $417,000 at 5.875% and second mortgage paying off the balance (they can opt for a fixed second or a HELOC). With a principal and interest payments of $3,194 and closing costs of $3,200; it will take 24 months to break even on this scenario. From 24 months to when the fixed period of the ARM is over, the savings based on the difference between the monthly payments would be $5,576.

This chart, which I created utilizing The Mortgage Coach, is factoring in the 2.25% margin to the LIBOR rate back to January 1999. You can see there is a significant range with the rate. Home owners with ARMs based on the LIBOR rate from 2002 to 2004 were probably grinning from ear to ear (depending on what their margin was) when you see what their rate was compared to the 30 year fixed. Timing is everything with an adjustable rate mortgage.

What ever the home owner decides to do is completely up to them. Of course one of their options is to not refinance and wait to see what the new rate (LIBOR) will be in 65 months. If they wound up with a "best case scenario" new payment, it would be pretty sweet however the cost of paying the higher payment for 65 month and we don’t know what the index will be at the date of adjustment. Understanding your mortgage and knowing your available options just starts with contacting your local Mortgage Professional.

By the way, if you are a Washington State home owner who has not heard from your loan originator lately or if you would like me to adopt your mortgage, please contact me. Many LO’s have left the industry or do not provide service once the loan has closed. I’m happy to review your ARM (or fixed rate mortgage) without any obligation to refinance.

Filed Under: Mortgage Programs, Jumbo/Non-Conforming, Refinance

Seniors Facing Financial Whammy Should Consider a Reverse Mortgage

April 9, 2008 by Rhonda Porter Leave a Comment

From the front page of Monday’s Seattle PI: Seniors face financial ‘quadruple whammy’.

The article features a photo Seniors in line at the West Seattle Food Bank and begins with this sentence:

“Like many retirees, Wilma Johnson notices the price of everything in Seattle going up while the interest on her savings is flat to dropping.

“I told my cat she’s going to have to go out and catch her own food,” the 86-year-old Broadview homeowner said.

With a reverse mortgage, seniors qualify based on their home equity and their age (62 years old is the youngest allowed on title) and can receive either monthly payments, a lump sum of cash or a home equity line of credit that they can draw on when needed. If a Senior owns their home and has enough equity, there is no reason for them to struggle financially during their golden years. Reverse mortgages do not require income or credit for qualifying. It’s definitely worth consideration when it can improve quality of life.

Dear Wilma, your cat doesn’t need to catch her own food–please consider a reverse mortgage.

If you or someone you know are considering a reverse mortgage, please contact me.

Filed Under: Mortgage Programs Tagged With: reverse mortgage

Not a Friend of this Family: Part 2

March 31, 2008 by Rhonda Porter Leave a Comment

In part one of this story about Michael and Pam investigating a refinance with Woo Who, we uncovered how the bank Loan Officer was not willing to provide a copy of the Federal Truth in Lending to Michael and Pam. It was not until after Michael insisted that it was his right to receive this document, that it appeared disclosing a prepayment penalty that he was not informed of.

The story gets better. As I mentioned, Michael and Pam’s existing adjustable rate mortgage is scheduled to adjust this June. I reviewed the Note with Michael showing him that the index his mortgage rate is tied to is the Monthly Treasury Average (MTA). The Monthly Treasury Average is just that: a 12 month average of the monthly average yields of the US Treasury securities. The 12 month average is determined by adding together the Monthly Yields for the most recently available twelve months and dividing by 12. As it is based on a 12 month average, the rate does not move drastically. This could act as a benefit when rates are moving upwards and is less beneficially when rates are dropping. Here is the 411 on Michael and Pam’s current loan:

5/1 Adjustable Rate Mortgage current rate 5.125%. Principal and interest payment of $1154.31.
1st adjustment on June 1, 2008. Adjusting annually thereafter.
Index: Monthly Treasury Average – projected value on June 2008: 2.948%
Margin: 2.600%
Lifetime Cap: 11.950%

Based on this information, their new rate is estimated at 5.548%. The new rate is rounded up to the nearest 0.125% = 5.625%. The new mortgage would reamortize at their balance at that time (estimated at $196,000) based on the remaining term providing Michael and Pam a principal and interest payment of $1218.29. This is without refinancing–no closing costs–no loan approval. Simple.

Woo Whoo’s proposal is a 5/1 ARM with a prepayment penalty at 5.375% with a principal and interest payment of $1108.74 and closing costs of $2283.74 (not calculating how many years and what the penalty is for the prepay).

When Michael and Pam understood their options, they elected to stick it through with their existing ARM. Their rate should drop lower when it adjusts again next June. Michael was puzzled (to put it mildly) as to why the representative from Woo Whoo Bank didn’t explain this to them. Especially since the loan that would be refinanced was with Woo Whoo.

It’s painfully simple. The Loan Originator would not be paid for giving free advice. It’s real easy for LO’s and mortgage companies to target those with adjustable rate mortgages and plant fear of the adjustment. Or perhaps the Whoo Who Loan Originator didn’t even consider how Michael and Pam would fair not refinancing.

This is why it’s so important to review your mortgage Note and understand how and when it adjusts (if you have an ARM). If it all seems like too much to figure out, contact your Mortgage Professional to help you. If your loan originator is neglecting you (perhaps they’ve left the industry or do not care for clients after the transaction is closed), I’m happy to adopt your Washington State mortgage…no refinance required.

It’s all about understanding all of your options and sometimes, that option is: do nothing.

Filed Under: Mortgage Programs, Mortgage, Refinance

Not a Friend to this Family: Part 1

March 28, 2008 by Rhonda Porter Leave a Comment

When I helped Micheal and Pam with the financing of their home almost five years ago, it was a challenging transaction. They were excellent borrowers, except for the particular type of Visa he had (they’re Canadian). Long story short, we wound up doing a 5/1 ARM through Woo Whoo Bank as they were only planning on staying here for about 5 years. About four months ago, Micheal met with me to review his Note and to see about refinancing. They may be staying a few years longer if they have their choice…Michael is having a challenge extending his Visa. Michael wanted to refinance and was concerned about his ARM adjusting. With our current mortgage climate and his current situation with his Visa, I could not refinance him. We reviewed how his ARM and discussed how it functions and at that time, I told him that he has time–he did not to refinance yet. He was still feeling pressured to do something–letting his ARM adjust was not sinking in. He went directly to Woo Whoo to investigate a refinance. Michael forwarded me the first good faith estimate from Big Bank. The rate seemed too high to me; especially compared to his current mortgage. I again encouraged him to wait out a few more months to see what rates do and that by that time,he would have more information on the status of his Visa. Fast forward to the present.

[Read more…]

Filed Under: Mortgage Programs, Interest Rates, Rant, Refinance