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Valley Tree Mortgage Roanoke Virginia and surrounding areas Edgar Ornelas. lending, tree.
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FAQ's

Here are some answers to some commonly asked questions. If you have any questions that aren't listed, contact us at 540-444-0577. You can email us at info@valleytreemortgage.com.

I can't afford 20% to put down on a house?
Is an Interest Only loan right for me?
What are No Documentation Loans?
Do I need to get an Appraisal of my property?
Do you offer Custom Loan programs?
I have some credit problems, can I secure a mortgage?
Can I use some of my IRA or 401(k) plan for a down payment?
What's the difference between a fixed and adjustable rate mortgage?
Is a fixed or an adjustable rate mortgage better?
What is private mortgage insurance (PMI)?


I can't afford 20% to put down on a house?
Assuming you can qualify for higher monthly mortgage payments and have an excellent credit history, you should be able to find a low (0 -15%) down payment loan. However, you may have to pay a higher interest rate and loan fees (points) than someone making a larger down payment.

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Is an Interest Only loan right for me?
There are many benefits to interest only mortgage loans. Here are some of the scenarios where an interest only mortgage loan might benefit you:

1. If you are in a situation where your income is sporadic and would rather have the option of paying as little as possible sometimes and then paying larger amounts when there is more income, for example, a real estate agent or loan officer.

2. If you are investing your mortgage payment savings in something else that is low risk, and has a much higher return on your money than your house payment.

3. If you are temporarily in a situation where your income will be low for a while but then increase later on.

4. If your mortgage is only temporary, for example, an investor looking to flip a property or someone who is working on a fixer upper. It would be good in any situation where it would be in your best interest to keep the payment low as opposed to creating equity in the home.

How much can you save with an interest only mortgage loan? For loan amounts under 500,000 you can usually save around 10% or more off of your mortgage payment. However, that number can vary depending on your individual situation. An interest-only mortgage loan can be very beneficial because it can help you save money on your payment when there are other things that you would like to invest your money in. It also gives you flexibility when your income is sporadic and you need to make sure that you will always be able to make your payment on time.

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What are No Documentation Loans?
No Documentation loans require little or no documentation to prove the borrower's income and assets.

They are offered mostly for self-employed borrowers who have difficulty verifying all of their income, and for service industry employees, such as bartenders, waiters, and hair stylists that have pay which is difficult to determine precisely. Also, borrowers who get most of their income from commissions, may be best served with this type of loan. For example, a borrower who has income primarily from rental properties and investments may be hesitant to verify all sources of income due to the volumes of paperwork this would require. Additionally, borrowers who receive a good portion of their income in cash, such as tips, might also benefit in this type of loan.

Because of the risk associated with No Documentation loans, a borrower may be required to make a down payment. In some cases, the Loan to Value is limited to 70 -75%. Some lenders, however, will allow a 90% - 100% LTV. If the borrower qualifies for a zero down loan, they'll most likely pay a higher interest rate than a borrower who can fully document their income.

Credit standards are usually held to a slightly higher level for No Documentation loans. Additionally, some lenders will require borrowers to maintain higher bank balances than conventional applicants.

Lenders will assess higher interest rates and fees on loans when little or no documentation is provided to prove the borrower's income. Expect the interest rate to be about .5 to 1 percent more than the rates on a fully documented loan. Therefore No Documentation loans should only be used when needed, not to avoid the paperwork of a Full Documentation loan because of the added expense. No Documentation loans come in several varieties, such as Stated Income, No Income Verification, No Ratio, etc. With a Stated Income loan, the borrower can simply state his income on the application, and does not have to provide any documentation to substantiate this stated income. Lenders usually verify the borrower has assets that logically match the stated income.

To determine the best way to apply for a loan to ensure you're approved on the best possible terms, feel free to discuss your situation with us. We can offer you insight based on many years of experience. Click here to apply online and see what rate you qualify for.

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Do I need to get an Appraisal of my property?
Depending on the specifics of your loan and property, we may be able to get an appraisal value based on similar homes in your neighborhood. Therefore, eliminating the need for a physical inspection. To see if you qualify, call us at 540-444-0577 or apply online and let us inform you of where you stand.

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Do you offer Custom Loan programs?
Yes, the different types of loan programs being offered are changing every day. Use our Loan Advisor so that we can get some basic information to help determine what loan type will best fit your needs.

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I have some credit problems, can I secure a mortgage?

You are not alone. Fortunately, there is a large segment of people with less then perfect credit. With that being said, many of the lenders we work with will underwrite a loan for individuals with less then stellar credit. To see if you qualify apply online and let us inform you of what we can offer you.

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Can I use some of my IRA or 401(k) plan for a down payment?
Under the 1997 Taxpayer Relief Act, first-time home buyers can withdraw up to $10,000 penalty free from an individual retirement account (IRA) for a down payment to purchase a principal residence. This $10,000 is a lifetime limit. The law defines a first-time homeowner as someone who hasn't owned a house for the past two years. If a couple is buying a home, both must be first-time homeowners. Ask your tax accountant for more information, or check IRS rules at http://www.irs.gov. Another source of down payment money is a loan against your 401(k) plan. Ask your employer or plan administrator if your plan allows for loans. If it does, the maximum loan amount under the law is the one-half of your interest in the plan or $50,000, whichever is less. Other conditions, including the maximum term, the minimum loan amount, the interest rate and applicable loan fees, are set by your employer. Any loan must be repaid in a "reasonable amount of time," although the Tax Code doesn't define reasonable. Be sure to find out what happens if you leave your job before fully repaying a loan from your 401(k) plan. If a loan becomes due immediately upon your departure, income tax penalties may apply to the outstanding balance.

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What's the difference between a fixed and adjustable rate mortgage?
With a fixed rate mortgage, the interest rate and the amount you pay each month remain the same over the entire mortgage term, traditionally 15, 20 or 30 years. A number of variations are available, including five- and seven-year fixed rate loans with balloon payments at the end. With an adjustable rate mortgage (ARM), the interest rate fluctuates according to the indexes. Initial interest rates of ARMs are typically offered at a discounted ("teaser") interest rate lower than fixed rate mortgage. Over time, when initial discounts are filtered out, ARM rates will fluctuate as general interest rates go up and down. Different ARMs are tied to different financial indexes, some of which fluctuate up or down more quickly than others. To avoid constant and drastic changes, ARMs typically regulate (cap) how much and how often the interest rate and/or payments can change in a year and over the life of the loan. A number of variations are available for adjustable rate mortgages, including hybrids that change from a fixed to an adjustable rate after a period of years.

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Is a fixed or an adjustable rate mortgage better?
It depends. Because interest rates and mortgage options change often, your choice of a fixed or adjustable rate mortgage should depend on: the interest rates and mortgage options available when you're buying a house your view of the future (generally, high inflation will mean ARM rates will go up and lower inflation that they will fall), and how willing you are to take a risk. When mortgage rates are low, a fixed rate mortgage is the best bet for most buyers. Over the next five, ten or thirty years, interest rates are more apt to go up than further down. Even if rates could go a little lower in the short run, an ARM's teaser rate will adjust up soon and you won't gain much. In the long run, ARMs are likely to go up, meaning most buyers will be best off to lock in a favorable fixed rate now and not take the risk of much higher rates later. Keep in mind that lenders not only lend money to purchase homes; they also lend money to refinance homes. If you take out a loan now, and several years from now interest rates have dropped, refinancing will probably make sense.

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What is private mortgage insurance (PMI)?
Private mortgage insurance (PMI) policies are designed to reimburse a mortgage lender up to a certain amount if you default on your loan. Most lenders require PMI on loans where the borrower makes a down payment of less than 20%. Premiums are usually paid monthly or can be financed. With the exception of some government and older loans, you may be able to drop the mortgage insurance once your equity in the house reaches 22% and you've made timely mortgage payments. The Servicing Lender will have the requirements for canceling the mortgage insurance.

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540-444-0577





Valley Tree Mortgage LLC
9 Wildwood Rd.
Salem ,  VA  24153
Phone: 540-444-0577
Fax:540-444-0578

 
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Valley Tree Mortgage, LLC is licensed by the Virginia State Corporation Commission – License #MC-4723 – NMLS ID #292775 (www.nmlsconsumeraccess.org).  Interest rates may change or may not be available at the time of loan commitment or lock-in.  These are estimates and are provided for informational purposes only.