Home Loans For Native Americans

Bank2 is pleased that as a 100% tribally-owned bank, we can offer our customers the personal touch they are looking for in a home loan. We offer dedicated professionals that know and understand the HUD-184 Home Loan program for Native Americans. We are the Nation's Leading Native American Home Lender and as such take care to offer each member of Indian Country the best services and programs around the country.

Regardless of where you live, we have the services and technology to offer you the best mortgage experience you've ever had throughout the nation.

HUD-184 Loan Program

HUD 184 loans are backed by the U.S. government, and are available for new construction, rehabilitation/renovation, refinancing, and purchase of existing homes. These loans feature competitive rates and terms as well as no mortgage insurance or hidden fees.

Eligible customers include:

American Indians or Alaska Natives who are members of a federally recognized tribe

Members of an Alaska Village and Regional Corporation (established pursuant to the Alaska Native Claims Settlement Act)

An Indian tribe

A Tribally Designated Housing Entity (TDHE)

An Indian Housing Authority (IHA)

READ MORE - Home Loans For Native Americans

Native American Direct Loan (NADL) Program

Program Description

The Native American Direct Loan Program makes home loans available to eligible Native American veterans who wish to purchase, construct, or improve a home on Federal trust land.

The home must be your primary residence.

(It’s also possible to use the program to re-finance an existing Native American Direct Loan.)

General Program Requirements

This program is designed specifically for Native Americans who want to purchase, build, or improve a home on Federal Trust Land.

Native Americans who may qualify for these loans include—

• Veterans (including Reserve and National Guard members who were called to active duty)
• Active duty service members
• Current Reserve and Guard members (usually after 6 years of reserve service)

Commissioned Officers of the Public Health Service and National Oceanic and Atmospheric Administration are considered to be active duty members and veterans, once discharged.

Length-of-service requirements apply in most cases.

Veterans must have been discharged under conditions other than dishonorable.

In addition, you must either (a) be a Native American enrolled in an American Indian tribe or Alaskan Native village, a Pacific Islander or a Native Hawaiian; OR (b) be married to such a person.

You will need a valid Certificate of Eligibility (COE). You can get one from VA or from a lender using the Automated Certificate of Eligibility (ACE) program.

If you need to obtain your COE, contact a lender about obtaining your COE or download VA Form 26-1880, complete it and mail it (with proof of service) to our Winston-Salem Eligibility Center at:

VA Loan Eligibility Center
PO Box 20729
Winston-Salem, NC 27120

You can download the form at http://www.va.gov/vaforms/.

For overnight delivery:
VA Loan Eligibility Center
251 N. Main Street
Winston-Salem, NC 27155

Toll free number: 1-888-244-6711
E-mail: nceligib@vba.va.gov

Loan Terms
The interest rate is set by VA. The length of the loan is usually 30 years with payments due monthly. The length of the loan is usually 30 years with payments due monthly.

The maximum loan amount is the same as the Federal Home Loan Mortgage Corporation (also known as “Freddie Mac”) single-family conforming loan limit. That limit is currently $417,000 for loans made on Federal Trust land located in the 48 contiguous States and $625,000 for loans made on Federal Trust land in Alaska, Hawaii, and the South Pacific. Increases in these loan limits will be published annually, based upon the annual adjustment in the Freddie Mac conforming loan limit.

There must be a Memorandum Of Understanding (MOU) between the tribe and VA. The veteran or the veteran’s spouse must be recognized as Native American subject to the jurisdiction of the tribe which controls land. The tribe must be Federally-recognized, and the home must on Federal trust land.

Interest Rate Reduction Refinancing Loans (IRRRLs) may only be done if prior loan was a NADL and there is at least 1% difference in existing loan rate and IRRRL rate.

Your Next Steps

The following information will lead you to the next steps to apply for this benefit.

Application Process
The tribe must enter into a Memorandum of Understanding with VA and provide VA with copies of lease to be used (if tribal trust land) and tribal foreclosure ordinances. Veteran completes application, with VA’s assistance, if necessary, and submits application to VA. If approved, VA schedules closing at veteran’s convenience. If it’s a construction loan, VA makes staged disbursements, through escrow account, to builder. Funds are disbursed upon approved progress inspections. More information on this may be found at http://www.homeloans.va.gov, including copies of model MOUs, leases, & foreclosure ordinances.

You must meet basic program requirements, including the following:

• The loan must be for the home you will live in.
• The home must appraise for the loan amount or higher.
• You must have enough income to meet your monthly mortgage payments, maintain the home, take care of other debts and obligations, and still have enough money left over to cover day to day expenses (food, gas, etc.)
• You must also have a good credit history.

READ MORE - Native American Direct Loan (NADL) Program

Loan Production

VA's Home Loan Program is for veterans and active duty military personnel (referred to as veterans throughout the rest of the document) and certain members of the reserves and National Guard. VA's program provides an excellent product and benefit for those individuals who have served or are serving to protect our families and our nation, as well as giving them a form of financing that will allow real estate professionals to sell more homes.

For those who are unfamiliar with the program, there are several advantages to using VA's Home Loan Program. The VA allows a veteran who qualifies income and credit-wise to purchase a primary residence without putting money down towards the sales price, as long as the sales price does not exceed the appraised value. Veterans do, however, need money towards closing costs and the earnest money deposit, which the seller generally requires when a sales contract is signed. Closing costs may be paid by the seller, which is an item to consider when the sales price is being negotiated.

Other benefits of using VA's program (other than the 100% financing of the sales price) include:

• Loans are assumable, provided the person assuming the loan is qualified.
• Veterans' closing costs are limited by VA.
• Additional assistance is offered by VA should veterans have problems making their home loan payments in the future.
• Prepayment of the loan without a penalty.
• There is no Private Mortgage Insurance
• Veterans must meet credit standards but loans are not “score driven”

Here are some quick facts you may find useful concerning purchase transactions:

• VA does not have a maximum loan amount. However, lenders do sell loans on the secondary mortgage market, so they will generally limit loans to the VA limit for the county where the property is located. With a down payment, loans may exceed these amounts.
• The veteran does have to qualify income and credit wise.
• The veteran does have to occupy the home as their primary residence.
• The veteran does not have to be a first time home buyer and may reuse his/her benefit.
• The lender, not VA, sets the interest rate and discount points, so they may vary from lender to lender.
• There is no private mortgage insurance, but VA does charge an up front VA funding fee, which may be financed. The exception to this is that if a veteran is in receipt of VA service connect disability payments each month, he or she does not have to pay a VA funding fee.
• The seller can pay for closing costs. There is a requirement that seller concessions do not exceed 4%, but only certain items are considered as part of the concession; i.e., payment of pre-paids, VA funding fee, payoff of credit balances or judgments on behalf of the veteran, funds for temporary buydowns (not discount points).
• The veteran is not allowed to pay for the wood destroying insect (termite) report; it is generally paid by the seller.
• VA does not approve the majority of loans. The majority of transactions are handled directly by the lender with little VA intervention.

Here are additional items you may choose if you find them useful:

• Certificates of Eligibility - What is needed, and how to obtain it.
• Lost proof of service? Visit the National Archives and Records Administration.
• Need to find lenders? Ginnie Mae

How much can the veteran afford (and other important factors)?

Please note that VA uses two methods for qualification purposes. The primary method of evaluating a veteran's income is the residual income method. Under this method, the underwriter determines that a veteran has sufficient income to cover day-to-day living expenses after paying housing expenses, taxes, and other debts such as car payments and credit card payments. VA also uses a debt-to-income ratio method like many programs. However, VA uses only one ratio which is the ratio of total debt (both housing and other debt) to income. To calculate the ratio, please go to the Ginnie Mae site.

Important: This is provided for informational purposes only. A VA approved lender is the best resource to see how large a VA loan the veteran truly qualifies for. The lender will look at income (amount and stability), credit and compensating factors involved when rendering a decision. VA also allows lenders to use certain approved automated underwriting systems.

Other Useful Links:

• Ginnie Mae - This site will give you information on the process and calculators
• HUD - Contains information on shopping for a home, closing costs and terminology
• MBA (Mortgage Bankers Association of America) - Will give you information on the purchase process, calculators and real estate terms.
• Freddie Mac (Federal Home Loan Mortgage Corp.) - Site will give you information about the purchase process and real estate terms.
• FNMA (Fannie Mae) - Contains information on the purchase process.

Steps in the Process of a VA Home Loan:

There are five basic steps when obtaining a VA backed home loan. Although there are lots of details within each step and some may overlap, here is a basic overview of how the process works.

1. The veteran selects a home they are interested in. The purchase and sales agreement should contain a VA option clause. Sample wording for a VA option clause:
   "It is expressly agreed that, notwithstanding any other provisions of this contract, the purchaser shall not incur any penalty by forfeiture of earnest money or otherwise of be obligated to complete the purchase of the property described herein, if the contract purchase price or cost exceeds the reasonable value of the property established by the Department of Veterans Affairs. The purchaser shall, however, have the privilege and option of proceeding with the consummation of this contract without regard to the amount of the reasonable value established by the Department of Veterans Affairs."
   The contract must also allow the veteran to "escape" from the contract without penalty if he/she is unable to obtain a VA loan. Some veterans prefer to contact a lender to get "pre-qualified" (see how much they can afford) prior to searching for a home. Veterans may also apply for a certificate of eligibility prior to looking for a home or contacting a lender. Please review our site for information on certificates of eligibility and a listing of lenders.
2. Contact a lender to apply for the loan. At this point, if the veteran has not already obtained his/her certificate of eligibility, they will need to. The lender may be able to obtain it off the internet or the veteran may have to complete a form and send it to the eligibility center. In either case the lender will be able to assist in the procedures of how to obtain a certificate of eligibility. The lender will complete a loan application and gather supporting documentation, i.e., paystubs and bank statements. An important item for veterans to know is that lenders set their own interest rates, discount points and closing points.
3. The lender will "process" (develop) all credit and income information. Lenders are allowed to use VA approved automated underwriting systems. The lender will also order a VA appraisal. VA's appraisal is not a home inspection or a guaranty of value. It is an estimate of the market value as of the date the inspection is made comparing it to similar homes that have recently sold in that area. Although the appraiser does look for obviously needed repairs, VA does request that appraisers not address cosmetic items. VA does not warrant the condition of existing homes. The appraiser is a licensed individual who does not work for VA but is chosen by VA to assure his/her review is unbiased in any way. The lender can not request which appraiser to use, they are assigned on a rotation basis.
4. Upon receipt of the appraisal and all supporting documentation on credit, income and assets, the lender will "underwrite" the loan. It is the lender who reviews all the data collected and decides if the loan should be granted, developed for additional data or if the veteran does not qualify and must be denied. Although VA does "underwrite" some loans, it is very rare. The decision on whether or not to approve the loan is generally made by the lender.
5. The final step for loans that meet VA regulations and guidelines is the loan "closing" (when the transfer actually takes place). The lender chooses the title company, attorney or if their representative will conduct the closing. The title company, attorney or lender representative who will handle the closing will coordinate the date and time. If there are any questions during the process that the lender can not assist you with, please contact a VA representative.

READ MORE - Loan Production

Home Loan Guaranty Services

VA Direct Home Loans for Native American Veterans
Living on Trust Lands (On-Line Version)

WHO IS ELIGIBLE?

VA direct home loans are available to eligible Native American veterans who wish to purchase or construct a home on trust lands. Details on the military service requirements are spelled out below.

WHAT CAN THE LOAN BE USED FOR?

A VA direct loan can be used to purchase, construct, or improve a home on Native American trust land. These loans may also be used to simultaneously purchase and improve a home or to refinance another VA direct loan made under this program in order to lower the interest rate. VA direct loans are generally limited to the cost of the home, or the Federal Home Loan Mortgage Corporation single-family conforming loan unit, whichever is less. Contact a VA office with loan activities for information regarding the current loan limit and any other questions you may have concerning VA direct home loans. The addresses and toll free numbers of the VA office servicing your area can be found at the bottom of this page.

FIVE EASY STEPS TO A VA LOAN

1. Make sure that your tribal organization or other appropriate Native American group is participating in the VA direct loan program. The tribal organization must have signed a Memorandum of Understanding with the Secretary of Veterans Affairs, which includes the conditions governing its participation in the program.
2. Apply for a Certificate of Eligibility. A veteran who doesn’t have a certificate can easily obtain one by completing VA Form 26-1880, Request for a Certificate of Eligibility for VA Home Loan. This form should be mailed to the VA Eligibility Center, P.O. Box 20729, Winston-Salem, N.C. 27120. To contact the VA Eligibility Center, call toll free 1-888-244-6711.
3. Decide on a home to buy and sign a purchase agreement or a contract with the builder to build the home. Make sure to include in the contract a provision that makes the contract void if you are unable to obtain a VA direct loan.
4. Contact either your local housing authority or VA to apply for the loan. An appraisal of the property will be ordered, and you will be asked to provide information needed to verify your income and credit history.
5. Close the loan and move into your new home.

HOW TO GET A VA DIRECT LOAN

Who is Eligible?

Veterans who were honorably released from active duty service, during World War II and later periods are eligible for VA loan benefits. World War II (September 16, 1940 to July 25, 1947), Korean conflict (June 27, 1950 to January 31, 1955), and Vietnam-era (August 5, 1964 to May 7, 1975) veterans must have at least 90 days service. Veterans with service only during peacetime periods and active duty military personnel must have had more than 180 days active service. Veterans of enlisted service that began after September 7, 1980, or officers with service beginning after October 16, 1981, must in most cases have served at least 2 years.

Persian Gulf Conflict. Basically, reservists and National Guard members who were activated on or after August 2, 1990, served at least 90 days and were honorably released from the period of activation are eligible.

Reservists. Members of the Selected Reserve, including the National Guard, who are not otherwise eligible and who have completed 6 years of service and have been honorably discharged or have completed 6 years of service and are still serving, are eligible. Ask VA about what is needed to establish eligibility. Reservists will pay a slightly higher funding fee than regular veterans. (See paragraph entitled "Costs of Obtaining a VA Direct Loan.")

VA DETERMINATION OF REASONABLE VALUE

The maximum loan amount may not exceed VA's estimate of the reasonable value of the property to be purchased. A qualified appraiser assigned by VA will perform the appraisal and make this determination. An application fee, collected from the veteran at the time of loan application, will be used to pay for the cost of the appraisal and for other expenses connected with the processing of the loan.

It is important to recognize that VA does not guarantee the value or condition of the property. Homebuyers should carefully inspect the property themselves, or have it inspected by a reputable inspection firm.

Loan Application

Contact either your local housing authority or VA to apply for the loan. The party processing the loan verifies the applicant's income and assets, and obtains a credit report to see that other obligations are being paid on time. If VA office reviewing the package determines that all is well and the appraised value of the property is enough to cover the loan needed, the loan will be approved and a date set for loan closing.

REQUIREMENTS FOR LOAN APPROVAL

To obtain a VA direct loan, the law requires that:

• The applicant must be an eligible Native American veteran who has available entitlement.
• The tribal organization or other appropriate Native American group must be participating in the VA direct loan program. The tribal organization must have signed a Memorandum of Understanding with the Secretary of Veterans Affairs, which spells out the conditions under which the program will operate on its trust lands.
• The loan must be to purchase, construct, or improve a home on Native American trust land. Individually allotted land is considered trust land for this purpose.
• The veteran must occupy the property as his or her home; a loan for rental or investment purposes is not permitted.
• The veteran must be a satisfactory credit risk.
• The income of the veteran and spouse, if any, must be shown to be stable and sufficient to meet the mortgage payments, cover the other costs of owning a home, take care of other obligations and expenses, and have enough left over for family support.
• All prospective applicants are encouraged to first contact either their local housing authority or VA to discuss their financial situation and obtain a general idea of whether or not they might qualify for a home loan.

COSTS OF OBTAINING A VA DIRECT LOAN

• A funding fee of 1.25 percent must be paid to VA unless the veteran is receiving compensation because of a service-connected disability. In the case of veterans who qualify based on service in the Reserves or National Guard, which was not active duty, the funding fee is 2 percent of the loan amount. The funding fee may be paid in cash or it may be included in the loan.

Other closing costs may not be included in the loan. Closing costs may vary because of differing local laws and customs. The following items may be paid by the veteran purchaser, the seller, or shared:

• VA appraisal
• Credit report
• Loan processing fee of up to $300 to a party who processes your loan
• Title search and title insurance or other title review fee
• Recording fees
• State and/or local transfer taxes, if applicable,
• Survey
• Hazard insurance premium

No commissions, brokerage fees, finders fees, or "buyer broker" fees may be charged to the veteran buyer.

READ MORE - Home Loan Guaranty Services

Native Americans and Mortgages

American Indians, while still falling below many minorities, have several avenues open to them to facilitate acceptance of mortgage applications. The Federal Govt. has established these agencies in response to problems American Indians may face when applying for a traditional mortgage. American Indians can face extraordinary difficulties in obtaining a traditional mortgage due to economic depression in tribal lands and unfair lending practices.

HUD provides Native American’s with recourse to mortgages through the establishment of its Office of Native American Programs, or ONAP. ONAP offers American Indians several options in mortgage types, loan duration, interest rates and amount of down payment. HUD’s ONAP can be accessed through mail, in person or through Web access; in addition, many websites offer a rundown of the benefits of ONAP’s loans providing valuable information to American Indians interested in HUD’s mortgage loans. Some of the benefits from using HUD’s One Stop Mortgage Center are zero down payment, potential refinancing, mobile home financing and veterans programs.

A partnership between the Native American Bank, LenderLive and Greenpoint Mortgage has resulted in turnkey home mortgages for American Indians for a number of purposes like rehabilitation, refinancing and home buying. This partnership provides American Indians with great resources to help in getting a home loan. The Native American Bank is now in position to be the number one lender to American Indians and to reap the rewards of serving this growing sector of the industry.

The Fannie Mae Organization has also created mortgage programs for Native Americans. These do not have as broad a spectrum as the HUD loans and some of the terms may be somewhat less attractive but they are quality mortgage loans offered at good rates. The Fannie Mae organization is a well respected entity in the nation, providing loans and mortgage information to people nationwide.

Freddie Mac also has a specialty division to assist American Indians with attaining a home mortgage.
They provide access to HUD loans and several other programs designed to help Native Americans. This institution provides information to help Native Americans understand the options available to them and the difference between what once was and what the industry has become today.
Home loans to Native Americans consistently fall behind mortgages to whites and several other minorities. The programs listed above were designed with this in mind, to bolster the numbers of American Indian’s successful loan applications. Traditionally, American Indians have been poorly received by many institutions due to tribal autonomy, poor economy in tribal lands and other issues of concern.

One of the factors behind Native Americans’ difficulty in obtaining mortgage loans is the situation on tribal lands. Many times, the economy of these lands is depressed, leading to low paying jobs and high unemployment rates. The American Indians have begun a promising change, however. Jobless rates, though still worse than national levels, are plunging. Social reforms, land acquisition and internal tribal change are revitalizing tribal lands and thus the economy and feasibility of acquiring home loans. Many groups are beginning to recognize the potential of the Native American peoples and are actively courting their interest.

READ MORE - Native Americans and Mortgages

How to Reduce Your Mortgage

One Additional Mortgage Payment a Year

There's a simple trick to significantly reduce the length of your mortgage and save you thousands of dollars. The trick is to make one extra mortgage payment a year and apply that payment toward your loan's principal.

This is the method being used by "Bi-Weekly Mortgage Reduction Services" and "Bi-Weekly Mortgage Savings Programs". Only, when you do it yourself, you don't pay a third party unnecessary set-up costs and fees!

Example: $100,000 loan, 30-year mortgage, 6.5% fixed interest rate

Extra Mortgage Payments/ Year Principal & Interest Additional Monthly Payment SAVINGS Total Paid # of Years 0 $632.07 0 0 $227,542.98 29.92 / 359 mos. 1 $632.07 $52.68 $29,088.02 $198,454.96 24.12 / 290 mos. 2 $632.07 $105.35 $28,399.71 $181,050.85 20.5 / 246 mos. 3 $632.07 $158.02 $58,320.95 $169,222.03 17.92 / 215 mos. 4 $632.07 $210.69 $66,969.79 $160,573.19 15.92 / 191 mos. 5 $632.07 $263.36 $73,607.77 $153,935.21 14.34 / 172 mos.

One-time Payment

It may not be possible for you to increase your monthly mortgage payment. Keep in mind that most mortgages will permit you to make additional payments to your principal at anytime. Perhaps, five-years after moving into your home you receive a larger than expected tax return, or an inheritance or a non-taxable cash gift. You could apply this money toward your loan's principal, resulting in significant savings and a shorter loan period.

Example:

With a $100,000, 30-year, 6.5% fixed interest rate mortgage loan, the borrower will pay a total of $227,542.98 to pay back the loan in 30 years. That equals $127,542.98 in interest payments.

If the same borrower makes a one-time $5,000 payment the first day of year 6, he/she will pay a total of $204,710.75 and pay off the loan in 27 years (324 months). That's a savings of $22,832.23 in interest.

READ MORE - How to Reduce Your Mortgage

American Homefront Mortgage

American Homefront Mortgage is committed to helping you find the right mortgage product for your needs. We understand that every borrower is different, and we offer a variety of products to meet your individual requirements. We make the process of securing a mortgage simple and straightforward by offering you the latest in financial tools that enable you to make sound financial choices.

READ MORE - American Homefront Mortgage

Needler Home Loans

An overview of the loan process

Make no mistake, there's a lot involved in getting a mortgage loan. You wouldn't be here on our website if you could fill out a one-page application and get the best loan for you funded the same day. What we do is do most of the heavy lifting for you, so you can concentrate on what's important -- preparing to move into your new home, saving money, or making plans for your home equity check.

There are four main steps involved in getting a loan. You'll see that we've made your part in them as easy as possible, and we do all the work! That's what we're here for.

Step one: determine how much you can borrow

This is a function of a couple things. How much of a monthly payment can you afford? And given your unique credit and employment history, income and debt, and goals, how much will a lender loan you? The first part you can get a rough idea of by using the calculators on our website. We'll also help you through different scenarios by asking a few simple questions. Based on standard lender guidelines, we'll get you a good idea of what kind of terms and loan program you can expect to benefit most from.

Step two: pre-qualify for your loan

This is where the rubber meets the road and you save the most money. You supply information about your employment, your assets, your residence history, and so on. We get your permission to run your credit score. When we review all this information we give you a Pre-Qualification Letter. Handle it with care -- to a home seller, it's like a suitcase full of cash! Your realty agent will use your Pre-Qual (as they may call it) to make the best offer on the home you choose, and the seller knows you're pre-qualified. It gives you buying clout! And while you're picking out the home that's right for you, we're busy finding the loan that's right for you.

Step three: apply now! We make it easy

Once you've made an offer and it's been accepted, it's time to complete the loan application. It couldn't be easier, and you can do it online, right here at our website. When the time is right, we'll order an appraisal of your new home.

Step four: your loan is funded

Your realty agent and the seller's will work together to designate an escrow/title company to handle the funding of your loan once it's approved. We'll coordinate with the escrow company to make sure all the papers your lender will need are in order, and you'll sign everything at the escrow/title company's office.

READ MORE - Needler Home Loans