First Time Home Buyer
Down Payment Grant up to $10,000 Available in Tennessee

Great Start Grant • 4% Grant for   Downpayment • 5.80% 30 Year Fixed Rate • 100% loans available • FHA, VA & Conventional • Homebuyer Education    is required

Great Advantage Grant • 2% Grant for   Downpayment • 5.55% 30 Year Fixed Rate • 100% loans available • FHA, VA & Conventional • Homebuyer Education    is required

Great Rate Grant • 5.20% 30 Year Fixed Rate • 100% loans available • FHA, VA & Conventional • Homebuyer Education    not required

The state of Tennessee, many counties, many cities and private organizations provide free money for its residents who are first time home buyers and need help with the down payment and closing costs. This money comes primarily in the form of grants. This is free money that shouldn’t be passed up!

Tennessee mortgage banker, Scott Hines, with Gateway Funding Mortgage, specializes in the Tennessee Housing Development Agency (THDA) and other grant loan programs. These programs offer either a below market interest rate or state grant money for your down payment and closing cost. One of the primary ways THDA assist people is by offering mortgages for first time homebuyers, with grants of up to 4 percent of the acquisition cost or below market interest rates. THDA’s programs are designed for low and moderate income borrowers. Since it’s inception in 1973, THDA has made over 93,000 mortgages.

Benefits of FHA financing:

• Only a 3 percent down payment is required.
• The FHA does not require a minimum FICO score to meet qualifications
• Gifts can be used for a down payment.
• Closing costs can be financed.
• Lower monthly mortgage insurance premiums and, under certain conditions, automatic cancellation of the premium.
• Easier underwriting criteria than conventional loans
• FHA limits the amount lenders can charge for some closing cost fees (e.g. the origination fee can be no more than 1% of mortgage).
• Maximum FHA loans in the Nashville area equal: $432,000.
• FHA will allow a home purchase two years after a bankruptcy filing

FHA has a home improvement loan, section 203(k) insurance, which enables homebuyers and homeowners to finance both, the purchase (or refinancing) of a house and the cost of its renovation through a single mortgage - or to finance the renovation of their existing home. These programs operate through FHA-approved lending institutions which submit applications to have the property appraised and have the buyer's credit approved. The borrower selects a licensed general contractor to complete the renovations and submits a bid. The bank will assign an FHA fee inspector to review the bid, inspect the home and make recommendations as to additional work required by FHA. The lender fund the mortgage loans which the Department insures. The FHA 203k loan program is the Department's primary program for the renovation and repair of single family properties.

VA guaranteed loans are made by lenders and guaranteed by the U.S. Department of Veteran Affairs (VA) to eligible veterans for the purchase of a home. The guaranty means the lender is protected against loss if you fail to repay the loan. In most cases, no down payment is required on a VA guaranteed loan and the borrower usually receives a lower interest rate than is ordinarily available with other loans. Although mortgage insurance is not required, the VA charges a funding fee to issue a guarantee to a lender against borrower default on a mortgage. The fee may be paid in cash by the buyer or seller, or it may be financed in the loan amount. A VA loan can be used to buy a home, build a home and even improve a home. A Certificate of Eligibility from the VA must be presented to the lender to qualify for the loan.

Other benefits of a VA loan include:

• Negotiable interest rates.
• Closing costs are comparable and sometimes lower - than other financing types.
• No private mortgage insurance requirement.
• Right to prepay loan without penalties
• The Mortgage can be taken over (or assumed) by the buyer when a home is sold.
• Counseling and assistance available to veteran borrowers having financial difficulty or facing default on their loan.
• The maximum VA loan for Veterans and National Guard members who qualify is $359,650

Conventional mortgage loans are mortgages that are not covered by any government program of insurance or guarantee. Such loans may be eligible for purchase by the major secondary market agencies Fannie Mae and Freddie Mac which offer standardized underwriting guidelines for conforming loan amounts up to $417,000. These loans can carry fixed or variable (ARM) mortgage rates and a variety of repayment terms that can be tailored to your individual needs. Down payment requirements may be as little as 5%, although loans with less than 20% down require mortgage insurance. Generally, these loans do not have prepayment penalties. Gateway Funding is a market leader in providing low Nashville mortgage rates and is one of Nashville’s most comprehensive full-service mortgage companies.

The traditional fixed rate mortgage is the most common type of loan programs, where monthly principal and interest payments never change during the life of the loan. Fixed rate mortgages are available in terms ranging from 10 to 30 years and can be paid off at any time without penalty. This type of mortgage is structured, or "amortized" so that it will be completely paid off by the end of the loan term.

Adjustable Rate Mortgages (ARM)'s are loans whose interest rate can vary during the loan's term. These loans usually have a fixed interest rate for an initial period of time and then can adjust based on current market conditions. The initial rate on an ARM is lower than on a fixed rate mortgage which allows you to afford and hence purchase a more expensive home. Adjustable rate mortgages are usually amortized over a period of 30 years with the initial rate being fixed for anywhere from 1 month to 10 years. All ARM loans have a "margin" plus an "index." Margins on loans range from 1.75% to 3.5% depending on the index and the amount financed in relation to the property value. The index is the financial instrument that the ARM loan is tied to such as: 1-Year Treasury Security, LIBOR (London Interbank Offered Rate), Prime, 6-Month Certificate of Deposit (CD) and the 11th District Cost of Funds (COFI).

When the time comes for the ARM to adjust, the margin will be added to the index and typically rounded to the nearest 1/8 of one percent to arrive at the new interest rate. That rate will then be fixed for the next adjustment period. This adjustment can occur every year, but there are factors limiting how much the rates can adjust. These factors are called "caps". Suppose you had a "3/1 ARM" with an initial cap of 2%, a lifetime cap of 6%, and initial interest rate of 6.25%. The highest rate you could have in the fourth year would be 8.25%, and the highest rate you could have during the life of the loan would be 12.25%. Some ARM loans have a conversion feature that would allow you to convert the loan from an adjustable rate to a fixed rate. There is a minimal charge to convert; however, the conversion rate is usually slightly higher than the market rate that the lender could provide you at that time by refinancing.

A mortgage is called “Interest Only” when its monthly payment does not include the repayment of principal for a certain period of time. Interest Only loans are offered on fixed rate or adjustable rate mortgages as wells as on option ARMs. At the end of the interest only period, the loan becomes fully amortized, thus resulting in greatly increased monthly payments. The new payment will be larger than it would have been if it had been fully amortizing from the beginning. The longer the interest only period, the larger the new payment will be when the interest only period ends. You won't build equity during the interest-only term, but it could help you close on the home you want instead of settling for the home you can afford. Mortgages with interest only payment options may save you money in the short-run, but they actually cost more over the 30-year term of the loan. However, most borrowers repay their mortgages well before the end of the full 30-year loan term.

Tennessee Housing Development Authority (THDA) through Gateway Funding offers the best grant programs available for first time homebuyers with good credit anywhere in Tennessee!

Grants up to $9,044!

Great Start Grant • 4% Grant for   Downpayment • 5.80% 30 Year Fixed Rate • 100% loans available • FHA, VA & Conventional • Homebuyer Education    is required

Great Advantage Grant • 2% Grant for   Downpayment • 5.55% 30 Year Fixed Rate • 100% loans available • FHA, VA & Conventional • Homebuyer Education    is required

Great Rate Grant • 5.20% 30 Year Fixed Rate • 100% loans available • FHA, VA & Conventional • Homebuyer Education    not required

In the United States, a jumbo mortgage is a mortgage with a loan amount above the industry-standard definition of conventional conforming loan limits. This standard is set by the two largest secondary market lenders, Fannie Mae and Freddie Mac. Loans above the conforming limits may be offered by seller servicers of these wholesale institutions, as well as Wall Street conduits who provide warehouse financing for mortgage lenders. The loan amounts reflect average loan sizes nationwide.

Jumbo mortgages apply when agency (FNMA and FHLMC) limits don’t cover the full loan amount. Fannie Mae (FNMA) and Freddie Mac (FHLMC) are large agencies that purchase the bulk of residential mortgages in the U.S. They set a limit on the maximum dollar value of any mortgage they will purchase from an individual lender. As of 2008, the limit is $417,000, or $625,500 in Alaska, Hawaii, Guam, and the U.S. Virgin Islands. The average interest rates on jumbo mortgages are typically greater than is normal for conforming mortgages, and vary depending on property types and mortgage amount. Jumbo mortgage loans are a higher risk for lenders. This is because if a jumbo mortgage loan defaults, it is harder to sell a luxury residence quickly for full price. Luxury prices are more vulnerable to market highs and lows. That is one reason lenders prefer to have a higher down payment from jumbo loan seekers.

Jumbo home prices can be more subjective and not as easily sold to a mainstream borrower, therefore many lenders may require two appraisals on a jumbo mortgage loan. The spread, or difference between the two rates, depends on the current market price of risk. While typically the spread fluctuates between 0.25 and 0.5%, at times of high investor anxiety, such as August of 2007, it can exceed a full percentage point.

A refinance loan is generally a conventional loan that is used to refinance an existing mortgage for a variety of reasons. The most common reasons are:

• To lower your existing rate and increase cash flow
• Debt consolidation to pay off high interest consumer debt
• Stabilize your finances by going from an adjustable to a fixed rate
• To complete home improvement projects

If you have a current FHA, VA or Conventional loan and you are just refinancing for a lower rate, it may be possible to complete a streamline refinance which offers reduced fees and no income or asset verifications.