Note: This blog was originally published in March 2013 and has been updated.

There are many types of mortgages out there, but if you are Veteran looking to buy a home, you should consider a VA loan. The features of this loan make it a great option for many Veterans and their families. Before we discuss those features and benefits, let us first answer: what is a VA Loan?


Through the original Servicemen’s Readjustment Act, also known as the GI Bill of Rights, the Veterans Affairs loan began in 1944. VA loans are guaranteed by the United States Department of Veterans Affairs (VA). The loan was specifically designed to provide eligible American Veterans and their families with a federally guaranteed home so they could take part in the American dream.


VA loans offer no down payment requirement (for qualifying consumers) and often do not require Private Mortgage Insurance (PMI). Additionally, if refinancing an existing VA loan, the qualified borrower can take cash out of their home up to take out up to 95% of the appraised value as determined by VA. Some states also offer additional resources to Veteran homeowners, such as property tax reductions.


A Veteran, active duty, or honorably discharged may be eligible for a VA loan if he/she meets the following requirements:

More information about eligibility for VA loans can be found on the VA website.

Our nation’s heroes deserve to achieve the American dream of homeownership. VA loans are there to help make it happen. If you would like to see if you qualify for this loan, contact one of our Licensed Mortgage Loan Originators. If you are ready to begin the process, click here to get started!

When applying for a loan, one of the most important factors that will come into play is your credit score. Before you start the loan application process, you should have a clear understanding of how your credit score affects your mortgage rate so you can assess your financial situation.

Most lenders use the FICO (Fair Isaac Corporation) model for credit scores. This model provides consumers a numerical value on a scale between 300-850. Typically, the higher your credit score, the lower the interest rate the lender will offer to you. Lenders use your credit score to determine how reliable you’ll be as a borrower and the likelihood that you’ll repay the loan as agreed upon. Essentially, they want to make sure you’ll make your mortgage payments on time each month. A lower score might indicate that a borrower could make late payments or even miss some. This is all part of your credit history, which they will also take into consideration.

So, can a bad credit score ruin your chances at obtaining a mortgage?

Not necessarily. It mostly impacts which type of loan you’ll qualify for and the interest rate you’ll receive. A conventional loan usually requires a minimum of a 620 credit score, whereas an FHA loan has a minimum of 580. However, it’s important to note that while some loan programs accept lower credit scores, they might require a larger down payment or some other way to mitigate the lender’s risk in taking on the loan. In addition, even though someone with a 580 credit score COULD qualify for an FHA loan, it does not mean that they will; it is at the discretion of the lender within the guidelines of the loan programs.

Let’s look at an example of how a 100-point difference in credit score can impact a borrower’s mortgage payment.*

A borrower has obtained a conventional fixed-rate 30-year loan of $200,000 with 10% down, meaning the amount borrowed is $180,000. She has a 750 credit score and received a 4% interest rate. Her monthly mortgage payment is $859 (not factoring in other fees, such as private mortgage insurance (PMI) or real estate taxes that may be included in the payment). Now, say that borrower dropped to a 650 credit score. She instead received a 5% interest rate. That increases her monthly mortgage payment to $966. That 100 point difference between credit scores ultimately means an extra $107 added to her mortgage payment each month. While that might not seem like a big deal, keep in mind the duration of the loan is 30 years. Having a higher interest rate means a yearly difference of $1,284; over 30 years that totals $38,520.

If you’re interested in comparing interest rates and monthly mortgage payments, use our mortgage calculator.

If your credit standing isn’t ideal, there are ways to build your credit score.**

Don’t worry if your credit isn’t the best right now. Raising your credit score can take a lot of time, patience, and discipline. However, if you follow these simple guidelines you will soon notice a positive change in your credit and ultimately your financial future. You’ll be able to qualify for better rates when it’s finally time to buy a home.

To learn more about credit scores and interest rates, contact one of our licensed Mortgage Loan Originators. If you are ready to begin the home buying process, click here to get started!

*The figures used in this example are hypothetical and the results are intended for illustrative and educational purposes only. **NFM Lending is not a credit repair company. Please contact a credit repair company for more information on how to improve your credit score.

One of our previous blogs on credit scores, Understanding Your Credit Score, talked about the factors used to calculate FICO scores (the most widely used scoring system). However, the blog did not go into detail on what a credit score is or the difference between credit report and credit score. The two are not only different, but they are used for different purposes. Here are the main differences:

Credit Report

A credit report is a record of your credit history. The report may include loan amounts, current balances, credit companies used, dates accounts were opened, recently opened lines of credit, payment history, third-party collections, and even details of public record, such as bankruptcies. These detailed reports are created by the three National Credit Reporting Bureaus: Experian, Equifax, and TransUnion. Each one of the Bureaus maintains one credit report per person. However, these reports can vary, since creditors do not have to report information to all three Bureaus. Federal law requires that each of the three Bureaus give consumers a free copy of their credit report every 12 months. You can receive a free copy of your credit report by going to

Credit Scores

A credit score is an algorithm used to measure your financial risk based on the information on your credit report. FICO scores are the most widely used, but VantageScore, and banks have their own. FICO scores have 5 factors used to calculate credit scores, and it weighs each factor differently. The other credit companies use similar information but may have different weights and/or include other data.

Key Differences

Here are two key differences between credit reports and credit scores to consider:

  1. Credit scores are calculated based on information found on your credit report at the time it was pulled. If your credit report changes, your credit score changes.
  2. There are several different credit scores from each company – FICO has 53! You only have one credit report per Bureau.


Lenders use credit reports and credit scores to see if you are responsible for your finances, and to make sure that you won’t be overwhelmed if you take on another loan. When taking out a mortgage loan, lenders look at both your credit report and credit scores, and are required to show you the three credit scores that were pulled from each of the three National Credit Reporting Bureaus for the application.

Interest rates, terms, and whether you can apply for certain loans are factors that are affected by your credit score. Contact one of licensed mortgage loan originators today if you have any questions or would like to see if you qualify for a mortgage loan.

NFM will be ready for August 1st

On August 1, 2015, the mortgage industry will introduce two new loan disclosures. The Loan Estimate and the Closing Disclosure will be utilized on most applications taken after the effective date. These changes will be implemented by the Consumer Financial Protection Bureau (CFPB) under the CFPB’s rule making authority pursuant to the Dodd Frank Wall Street Reform and Consumer Protection Act.

What do the changes mean?

Good Bye to the 2010 Disclosures

The Good Faith Estimate (GFE) and the Truth in Lending (TIL) disclosures will now be combined into the Loan Estimate for most transactions. Certain loans such as HELOC’s and reverse mortgage will still utilize the current disclosures. In addition the Closing Disclosure will replace the HUD-1, GFE, and TIL disclosures provided at settlement and must be delivered to the consumer three (3) business days prior to consummation.

The 1,888 pages of regulation that mandates the new disclosures and delivery requirements will not only impact lenders, but also other industry professionals. Because the rule expressly holds lenders liable for the accuracy and delivery of the Closing Disclosure, settlement agents companies and realtors must work closely to deliver all of the information necessary to ensure settlement is not delayed as a result of the three (3) business day delivery requirement.

NFM Lending is preparing for these changes and is constantly training our loan originators, realtors, settlement agents, and other industry partners to be up to date on this important industry change.

To view the new disclosures, visit the CFPB’s website at:

If you have any questions about NFM’s loan programs, please click here to contact one of our licensed loan originators.

LINTHICUM, MD, March 16, 2015 — NFM Lending is excited to announce it will be sponsoring a free Lunch and Learn seminar titled “Better Homes for a Better Community.” The seminar will be held on Saturday, April 11, 2015, at Windsor Park Children’s School located at 2601 North Rolling Road, Windsor Mill, MD 21244, from 10:30 a.m. to 1:00 p.m. Refreshments will be provided, and attendance will be on a first-come, first-served basis.

The seminar, co-sponsored with Phi Beta Sigma Fraternity, Inc., is intended to educate Baltimore City and County residents on topics such as:

NFM Lending’s General Counsel, LaTasha Rowe, and Mortgage Loan Originator, Jeremy Poling (NMLS #726269), will be speaking at this event and answering any questions the attendees may have.

For more information about the seminar, please contact:

Derek Mitchell
Director of Bigger and Better Business, Phi Beta Sigma Fraternity, Inc.
Staff Accountant, NFM Lending
Phone: 410-588-6211

About NFM Lending

NFM Lending (formerly NFM, Inc.) is a mortgage lending company currently licensed in 28 states across the U.S. The company was founded in Baltimore, Maryland in 1998. They attribute their success in the mortgage industry to their steadfast commitment to customers and the community. NFM Lending has firmly planted itself in the home loan marketplace as “America’s Common Sense Residential Mortgage Lender.”

About Phi Beta Sigma Fraternity, Inc.

Phi Beta Sigma Fraternity, Inc. was founded at Howard University in Washington, D.C., on January 9, 1914, by three young African-American male students. The Founders, Honorable A. Langston Taylor, Honorable Leonard F. Morse, and Honorable Charles I. Brown, wanted to organize a Greek letter fraternity that would truly exemplify the ideals of brotherhood, scholarship, and service.


For online press release, click here.

What Is Refinancing?

Refinancing is when you get a new mortgage to replace your existing mortgage. Most of the time, people refinance their mortgage when they are looking to reduce their monthly payments using the equity on their home (the difference between the amount owed and how much the home is currently worth).* Other reasons include changing from an adjustable-rate to a fixed-rate mortgage; avoiding balloon payments; cashing out to consolidate debt; consolidating a mortgage and a home equity line of credit; and even addressing family matters such as divorce. When you refinance, your first loan is paid off allowing the new mortgage to be created and placed as a first lien on the property.

Is Refinancing Right For Me?

If you think refinancing your home loan is something you might be interested in, ask yourself the following questions to see if refinancing is a good option for you:

– How long do I plan to stay in my current home?
– How much do I owe on my home?
– What is my interest rate and what are the current interest rates available?
– Can I afford to pay the costs associated with refinancing?
– Why do I want to refinance?

Once you have asked these questions, it’s time to assess your situation. You must check your equity, debt, and available cash, as these 3 items can greatly impact your ability to refinance your home. Here are the reasons why these 3 items are often problems for homeowners who wish to refinance:

      1. No Equity in Home – If you have little or no equity in your home, refinancing may not be the best option for you.  Another term for this is the Loan to Value (LTV) ratio of your home.  If you have less than 10% equity, or a 90% LTV, it will not be easy to refinance.


      1. Unpaid Debt – If you have other debts on top of your mortgage, they can impact your ability to refinance. If you are paying more than 38% of your income towards debt, you may not be able to refinance, and if you do refinance, you may not get the best rates.


      1. No Cash – In order to refinance successfully, you should have some cash set aside for emergencies and or to cover closing costs.  Some programs require up to three months cash reserves of principal, interest, tax, and insurance payments, also known as PITI.  These funds also need to be seasoned for two months in an account prior to refinancing.


When and How to Refinance

Ideally, you only want to refinance your current loan once. Usually, you have to plan to be in your house for a while for refinancing to make sense. You also have to figure out where you stand with your current mortgage and investigate whether or not your loan has a prepayment penalty (where you are charged a fee when you pay off your mortgage early). Furthermore, consider how long it will take you to recoup the closing costs of the new mortgage. Even though you will be making lower payments, extending your mortgage term can wind up costing you more in the long run. Make sure the timing and circumstances allow this to be the right time to refinance your mortgage.

If you believe you are ready, follow these 5 simple steps to refinance:

        1. Know Your Credit – As a consumer, you are entitled to receive one free credit report every 12 months from each of the nationwide consumer credit reporting companies – Equifax, Experian, and TransUnion. This free credit report may not contain your credit score, but it can be requested through the following website: Once you receive a copy, check to make sure your information is correct and remember to follow up on any discrepancies you find.


        1. Gather Your Paperwork – Mortgage lenders will require paperwork in order to get the refinance started.  Having these items ready will move the process along faster. Items include: driver’s license, Social Security Number, paystubs, tax returns, bank statements, debts, homeowner’s insurance policy, etc. To see a full list, click here.


        1. Apply – Research your lender options and make sure you chose a company that you trust and feel comfortable with before you apply.  Once you are ready, contact a Loan Originator who will help you navigate through your loan options.


        1. Stay Informed – The more you know the better. Don’t be afraid to ask questions!- How much can I borrow?
          – What interest rate do I qualify for?
          – What are the fees and other costs, and how much are they?
          – What terms are available?
          – How much will my monthly payment be?  How much will I be saving?
          – Is there a fee if I pay my mortgage off early?
          – Am I eligible for any special refinancing programs, such as government sponsored programs?


        1. Choose a Loan and Close The Deal – Once you are approved and are informed about your options, take the time to select the loan program that best suits your needs.  Make sure you keep in close contact with your Loan Originator and get them any additional paperwork they may need in order to schedule your closing.


    If you are ready to refinance your current mortgage, have any questions regarding the process, or want to find out if refinancing is right for you, please contact one of our Licensed Mortgage Loan Originators by clicking here.

    *Refinancing an existing loan may result in the total finance charges being higher over the life of the loan.

Are you looking to update your kitchen, build the master bathroom you always wanted, or even add a room to your home? Most home improvements or renovations not only help to better the look and feel of the home, they can also add value to your home (equity). But paying out of pocket for repairs and renovations is one of the biggest disadvantages of home ownership. You could rack up your credit cards, or borrow from your 401k, but these may not be enough.

The following are 5 ways you can finance your home renovations without breaking the bank:

A popular way to obtain cash for home improvements and renovations is through a “Cash-out Refi”. This is a simple way to change your existing mortgage loan for a new one by converting some of your home equity into cash. This may cause your mortgage term and monthly payments to increase, but it could very well be worth it if the improvements substantially will increase your current home equity once the repairs are completed.

A HELOC account is designed to act like a credit card, with an open-ended term, credit limit, and a minimum monthly payment based on the outstanding balance. With lower interest rates than most credit cards, a HELOC account is a great way to finance home improvements and renovations; as well to use as an “Emergency Funds” account one the balance for the repairs is paid off.

This is the least popular of the mortgage home equity options, as it could easily burden you with debt. A second mortgage is a loan secured on the current equity of your home. These loans tend to have a higher interest rate since your first mortgage lender is given priority over the new lender in case of a short-sale or bankruptcy. It is for this reason that second mortgages should be as small as possible.

FHA 203(k) loans are a type of federally insured mortgage loans that are used to fund renovations and repairs of single family properties. These loans can be made on a for up to a maximum of 110% of the after improved value of your home. There is a minimum of $5,000 of required repairs with no maximum (subject to FHA’s maximum county loan limits). These loans can be made to refinance your existing home or purchase a new home. You can learn more about the requirements for the loan by clicking here.

Fannie Mae’s HomeStyle® Renovation loan permits borrowers to include financing to renovate or make home repairs a purchase or refinance transaction. This is a first mortgage that can be made for up to a maximum of 50% of per-completion value. Cosmetic and structural renovations are permitted. Landscaping, appliances, and swimming pools are just a few of the allowable improvements. You can learn more about the requirements for the loan by clicking here.


So if you are looking to perk up your home to accommodate your current needs and lifestyle by repairing or renovating your home, consider what financial option is best for you.

If you have any questions or would like to talk to us about these or any other loans, contact one of our licensed Mortgage Loan Originators at NFM Lending by clicking here.


What is the LTV on a home? The Loan to Value Ratio (LTV) calculates how much equity you have in your home. Equity is the difference between your home’s fair market value and the balance you owe on the property.

It is important because it helps lenders determine a borrower’s qualification for loans and rates. Your LTV has a direct effect on your rate. In many cases, a lower LTV can mean you can obtain a lower rate.

How the LTV is Calculated

The LTV is calculated by dividing the amount of the mortgage by the appraised value or the purchase price of the home, whichever is less.

Here is an example of how the LTV is determined:

A loan applicant applies for a mortgage to purchase a home which the seller has agreed to sell for $350,000. The purchase price is $5,000 less than the home’s appraised value of $355,000. The loan applicant has savings of $70,000 to use for a down payment. The lender performs the following calculations:

{Purchase Price} – {Down Payment} = {Mortgage Amount}

{$350,000} – {$70,000} = {$280,000}

{Amount of Mortgage} ÷ {Purchase Price} = {LTV}

{$280,000} ÷ {$350,000} = {80%}

It’s important to note, however, if the appraisal is less than the purchase price, the borrower will have to increase his/her down payment or obtain mortgage insurance. For a loan amount over 80% LTV (loan to value ratio), Private Mortgage Insurance is required and must be obtained by the Lender.

If you have any questions about the LTV during your loan process, click here to ask a Licensed Mortgage Loan Originator.


The FHA (Federal Housing Administration) home loan is one of several government-insured loans. It has been offered by the Federal Housing Administration since 1934 according to HUD (U.S. Department of Housing and Urban Development). This loan type has helped over 40 million families in America purchase a home.


The FHA doesn’t lend money directly to home buyers; they insure lenders against losses that may occur from client default. Because of this, lenders have less strict requirements for borrowers.

One of the features borrowers enjoy the most is the low minimum down payment. There is a 3.5% minimum (check with your mortgage company for an exact percentage), which is a lot less than the requirements for a conventional loan. Additionally, your closing costs may be lower than a standard loan.

Typically, a borrower needs a credit score of at least 620 in order to qualify for this loan. With FHA mortgages, a mortgage insurance premium will be required in addition to your monthly payments. Mortgage insurance is implemented to help lenders protect their interest when allowing borrowers to secure a loan with little cash for a down payment.

With a FHA loan you have the option to get 30, 25, 20, and 15-year terms with fixed rates only. Also, you can pay your mortgage down at any time without getting pre-payment penalties (always check with your Loan Officer for specific guidelines).

Getting the Loan

If you have any questions regarding FHA loans, or if you would like to see if you prequalify, contact one of our licensed Mortgage Loan Originators today!