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Monday 11/20/2017 Mortgage Rates

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Wells Fargo Bank

Buy Your First Home. Buy Your Second Home

The information you need to get up to speed on Wells Fargo's mortgages in terms of their features, benefits, drawbacks, and what distinguishes their programs from others is all here. From the familiar fixed-rate loan to Wells Fargo's very own FLEX/FIXED program, adjustable rate loans, jumbo, VA, and FHA loans, this article will show you all you need to know about what's best for the future of your home.

1. Fixed-rate mortgages are ideal for you if you're planning to stay in your home for more than seven years knowing exactly what you'll be paying monthly for the entire life of the loan.

  • The features the borrower can utilize:
    • Different loan terms to choose from.
    • The ability to add Wells Fargo's FLEX/FIXED program.
    • Monthly payments and interest rates are constant for the full duration of the loan 
  • The benefits a borrower can enjoy:
    • FRMs are ideal for homeowners planning to keep the property for a long time.
    • In times of rising interest rates, the borrower of an FRM can enjoy sustained rates for the entire loan term.
    • FRMs are very easy to budget for as pending payments are predictable and fixed.
  • The drawbacks a borrower needs to watch out for:
    • The shorter a loan term for an FRM is, the higher the monthly payments (plus interest) will be.
    • Interest rates for FRMs are typically higher than that of adjustable-rate mortgages.

2. Wells Fargo's FLEX/FIXED program allows the borrower to buy down the interest rates of different mortgage plans to reduce the monthly payments due for an initial period of a mortgage.

  • The features of the program:
    • Up to three years of lower monthly payments within the initial stages of the loan term.
    • Compatibility with many mortgage plans.
    • Temporary buydowns.
  • The benefits of the program:
    • Just like FRMs, the fixed rate of interest allows the borrower to save their money for a rainy day.
    • The borrower can choose to buy down (lower interest rates) every six or twelve months, although some restrictions may apply to certain mortgages.
    • The ability to choose certain time periods - to an extent - for interest rates to remain fixed, making it easier for the borrower to manage cash when they're tight on money.
  • What the borrower needs to know:
    • To the extent that the lender pays for buy-down options for the borrower, the borrower will need to pay the difference back in some form or another (larger monthly payments or principal).
    • The temporary buy-downs are not available for all mortgage types.

3. Adjustable-rate mortgages (ARMs) are perfect if you know in advance that you'll sell your home before the 10-year mark. This is due to the fact that you'll benefit from very low interest rates for most if not all of that period, depending on the initial adjustment period (explained below) associated with your loan.

  • The features of ARMs:
    • The loan terms can be up to 30 years or less.
    • The first adjustment period (before the first time interest rates adjust) keeps monthly payments and interest rates fixed until they gradually change on a yearly basis.
    • Depending on the ARM a borrower takes, the initial adjustment period can be 5, 7, or 10 years.
  • The benefits of ARMs:
    • The initial interest rate for an ARM is typically lower than that of a fixed-rate mortgage.
    • ARM servicers provide an annual interest rates forecast for the new year to give the borrower the time to plan effectively.
    • ARMs are ideal for borrowers willing to relocate or refinance in a few years.
    • ARMs come with "caps" that limit how extreme interest rates soar.
    • Monthly payments are reduced when interest rates drop.
  • The drawbacks of ARMs:
    • When interest rates rise for everybody else, the borrower's interest rates have to adjust in the same direction.
    • Unpredictable rate adjustments can make it difficult for homeowners to plan for the future.

4. FHA loans are tailored to meet your needs if you're a low-income family member. Characterized by lenient conditions for qualification, FHA loans can be the one thing you need to expand your ownership over a home and build your own wealth.

  • FHA loan features:
    • Wells Fargo's FLEX/FIXED program is applicable to the FHA loan and allows borrowers the option to buy down interest rates and lower monthly payments.
    • A mortgage insurance premium (MIP) is required.
    • Gifts or grants can be used to cover the down payment or costs of closing the loan.
    • The FHA loan can either be a fixed-rate or an adjustable rate mortgage.
  • FHA loan advantages:
    • Where other mortgage plans require a 20% down payment, FHA's down payment can be as low as 3.5%.
    • Low-income borrowers are more eligible.
  • FHA loan disadvantages:
    • The borrower is obligated to pay mortgage insurance premium (MIP) along with their down payment.
    • The mortgage insurance premium (MIP) raises the interest on monthly payments until it is paid off.

5. VA loans are even less stringent towards your application in terms of your credit score but they have their own conditions regarding your affiliations with our country's military. Find out what they are here.

  • The VA loan features:
    • Eligibility for a VA loan includes members of the military reserves, veterans, and their family members.
    • A VA loan can either be a fixed-rate or an adjustable rate mortgage.
    • Borrowers are allowed to allocate gifts or grants towards closing costs.
    • Within certain guidelines, Wells Fargo's FLEX/FIXED program lets borrowers lower their interest rates and monthly payments on a VA loan.
  • The VA loan advantages:
    • Down payments can be as low as 0%.
    • Extremely lenient qualification requirements.
    • Unlike the FHA loan, a mortgage insurance premium (MIP) is not crucial for qualification.
    • Although a VA funding fee will be rolled into the loan amount, the fee is only 0.5 - 3.3%.
  • The VA loan disadvantages:
    • The VA loan is only applicable for a 1-unit residence (single family home).

6. Jumbo loans allow homeowners to borrow amounts higher than the limits set by government-affiliated agencies, Fannie Mae and Freddie Mac. These loans are sometimes said to be "non-conforming" since they exceed the usual limits.

Jumbo loan clients can enjoy the special attention of Wells Fargo's Private Mortgage Banking (PMB) team.

  • The features of jumbo loans:
    • Wells Fargo's FLEX/FIXED program can be integrated into the program.
    • Fixed-rate and adjustable-rate variants of this loan are available.
  • What borrowers can stand to benefit from the jumbo loan:
    • Limits surpass that of Fannie Mae and Freddie Mac's underwriting guidelines.
    • Jumbo loans are so substantial that they eliminate the need to take out another loan down the line.
    • Borrowers can choose to finance more than one primary residence, including vacation homes.
    • Hard cash is accepted from jumbo loan applicants.
    • Unique discounts on interest rates.
    • Down payments for the borrower can be as low as 10.01% if they have a sufficient credit score.
  • What borrowers can further benefit from Wells Fargo's Private Mortgage Banking (PMB) team:
    • Special customer service and focus.
    • Borrowers can "re-amortize" their loan to meet their financial goals with the help of the PMB team.
    • The PMB team are familiar with the borrower's transaction history and offer expert advice on investment properties, home financing, and wealth management strategies.
  • The main drawback of a jumbo loan:
    • Interest rates are very high for jumbo loans and will hinder the building of equity for homeowners for several years.

All lenders and banks require a preapproval processing of the buyer's credit score, assets, proof of income, proof of employment, Social Security number and other documentation. The same is true with Wells Fargo's processing of client information.

Comparing Wells Fargo's Mortgage Programs
Loan Types Fixed Interest Rates Low Initial Interest Rates Low Down Payment Larger Principal (Loan) Amount
 Fixed-Rate Mortgage    
 Adjustable-Rate Mortgage    
 FHA & VA Loans  
 Jumbo Loan *

 

*Available with Wells Fargo's FLEX/FIXED program which allows borrowers to start off with low monthly payments for up to three years with a fixed-rate mortgage (FRM).

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