Are You Special?
Guest Post by Tim Britt
I’ll wrap up our series on the three categories of Mortgage Loans this month with a discussion of Specialty Mortgages. In an earlier article, I mused that there isn’t a “one-size-fits-all” mortgage program…and began a dialogue regarding Affordable, Specialty, and Traditional mortgage loans. This month – we’ll tackle the Specialty Mortgage Loan Programs and discuss their features and benefits, as well as the typical clientele for them.
Specialty Mortgages provide financing to clients with very specific needs that may fall outside the purview of a traditional or affordable mortgage program. They also provide unique financing options for those in specific professions (e.g. 0%-down programs for Medical Doctors), as well as clients with special “Private Bank” or “Wealth Management” relationships with their financial institution. Potential clients are those who want to construct a home or purchase a lot for future construction, individuals with current or prior military service, or professionals such as doctors and teachers as well as those seeking to finance certain renovation projects. These products provide funding for unique situations and may have lower down-payment and flexible financing options.
While time and space don’t allow for a thorough discussion of each product available in this category, here are a few to give an idea of those available in the mortgage lending space today:
Many banks and mortgage lenders offer special financing for Medical Professionals (e.g. Medical Doctors and Dentists), with very attractive terms. These programs often feature zero down payment requirements and relaxed underwriting requirements as compared to Conforming Loans. These “Doctor Loans” can be a very attractive option for a new or established medical professional.
Construction-to-Perm loans are for clients who wish to finance the new construction of an owner-occupied residence. These programs can fund the acquisition costs of land, as well as the construction, and can convert to a Conforming loan when complete. One unique feature of this product is a single closing event at loan inception, thereby minimizing additional fees and costs for multiple loans (construction and mortgage).
Land/Lot loans are designed primarily for clients who wish to purchase land to build an owner-occupied home in the near future. The terms and types of loans vary widely among lenders, so be sure to check around to find one that best suits your needs.
Renovation loans are a great option for clients who currently own, or wish to purchase a home to update or modify it. There are both Government (FHA 203(k)) as well as Conventional programs available from many lenders. Each has their own unique features and limitations, however many will not allow for structural modifications to the property.
One benefit that many of our veterans enjoy is access to a VA-guaranteed home mortgage. The main feature of this program is a zero down payment requirement. The VA doesn’t actually originate the loan (banks and mortgage lenders do); however, they do provide a guarantee against potential default. This guarantee serves as an insurance policy for the lender originating the mortgage, similar to Mortgage Insurance. Veterans can check the VA’s website here to determine their eligibility.
So – are you in a situation where a Traditional or Affordable loan program doesn’t fit your mortgage lending needs? Contact me to see if you’re “special,” and if one of these Specialty Loan Programs is right for you!
Tim Britt is a Senior Mortgage Loan Officer (NMLS 1369718) with Fifth Third Bank in Franklin, TN. He can be reached at 615-415-8887 or [email protected]. The statements or opinions expressed are Tim’s own and do not necessarily represent those of Fifth Third Bank.