Types of Loans

Mike Fauth
Lending Manager, Citibank
Mike has been with Citibank since 1994. A veteran of the lending industry, his expertise comes from his years working as a home lending officer and lending manager.

What different types of loans are out there that agents may not know about?
Successful agents know that familiarizing themselves with standard industry programs can help them grow their business. Common mortgage programs such as FHA/VA, conventional 30-year fixed, adjustable rate mortgages and other GSE Agency salable programs are widely used, but what happens when these programs do not meet your client’s needs? Understanding the nuances of specialized lender portfolio products, relationship offers and local market programs may provide the solution you need to sell your next home.

Many lenders have developed mortgage portfolio programs that provide solutions to lending gaps and, in some cases, more advantageous pricing than the standard agency saleable products. For example, we offer the “HomeRun” program for first-time homebuyers or those seeking low down payment options and flexible underwriting criteria. This is a unique mortgage solution with a minimum down payment of 3 percent on single-family properties, of which only 1 percent is required from the homebuyer’s own funds. No mortgage insurance is required, even though the homebuyer does not put down 20 percent. That can add up to a significant cost savings, particularly since those rates are comparable to those of conventional fixed-rate products.

In addition to providing portfolio products, banks are looking to deepen client relationships. Most banks will agree that the more products a client uses, the more valuable the relationship, and may provide relationship advantages to loyal customers. Some banks offer tiered relationship pricing on mortgages for clients who have banking deposit relationships with them. For qualified pre-existing clients, our jumbo mortgage portfolio program (with overall loan limits of $8 million) provides a loan option up to $1 million with only 15 percent down, no mortgage insurance requirement, interest-only options and competitive rates. Understanding what banks may offer in relationship pricing is another great way to save your clients money and for you to close more transactions.

Agents should take some time to become aware of programs offered in Chicago. The “Micro Market Recovery Program” is a great example of a market-specific program and focuses on stabilizing the community by increasing the owner-occupancy and limiting foreclosure in the focus areas. In order to do this, the city of Chicago is offering “forgivable soft second loans” for existing and potential income-eligible homebuyers. A soft-second loan is a second mortgage that is forgivable over time if the borrower meets all specified criteria. By offering these soft-second forgivable loans, families will likely become more invested in their neighborhood, and more potential homeowners, investors and developers will be attracted to the area.

New products and programs surface in our market frequently, so it’s important to regularly schedule time to meet with your lending partners. Ask them to review all of the products and programs in the Chicago market and discuss any new developments that will help you put more clients in their ideal home.