Mortgage
Programs
|
|
Programs |
Description |
|
Fixed rate loans |
Interest rate and
payments remain the same over the term of the
loan. Normally offered for 10, 15, 20 and 30
years. |
|
Fixed rate balloon |
Interest rate and
payments remain the same until the loan is due,
usually 5 or 7 years at which time the entire
unpaid balance becomes due and payable. This is
sometimes the lowest of the interest rates
offered due to the short commitment from the
lender. Also you need to pay attention to the
APR for this type loan as even a small costs
amortized over a short period will make the
effective rate relatively high. |
|
Adjustable rates |
Interest rate and
payments remain the same until each of the
adjustment periods, usually each 1, 3, 6 or 12
months. There is normally a maximum that the
interest rate can fluctuate each period and over
the life of the loan. |
Adjustable rates
possible negative |
Interest rate and
payments remain the same until each of the
adjustment periods, usually 1 or 3 months. There
is a maximum that the interest rate can
fluctuate. It is possible to make a payment that
is less than the interest due, thereby
increasing the amount of the loan balance.
|
|
Graduated Payment |
Usually considered a
"fixed rate loan" although the payment changes
from an "more affordable" payment to a higher
payment over the first couple years of the loan
period. As the interest rate is the same
throughout the loan the first years payments may
not cover the actual interest owed, therefore
the loan may negatively amortize. |
|
Buy down |
This type loan is
actually a variable rate loan in that the
interest rate is lower the first years of the
amortization period. This is done for easier
qualification and more
affordable payments the early years of home
ownership. This differs from the GPM above in
that the payments always cover the interest owed
and reduce the balance. Note that there is an
additional fee to "buy down" a mortgage.
|
|
Loan to Value *There
are loans available without mortgage insurance,
but usually at slightly higher interest rates. |
| |
Mortgage Insurance
Required |
|
Conforming and jumbo
loans at or under 80% |
no |
|
Conforming and jumbo
loans over 80% |
yes |
|
Cash out refinance
loans at or under 75% |
no |
|
Cash out loans over
75% |
yes |
|
Low down payments as
low as 3% |
yes |
|
General Notes |
|
More than 1 unit |
Loans are available
for 1 to 4 unit structures. |
|
Non Owner occupied |
1-4 units held for
investment. Rates are normally higher for this
type of property due to the higher default rate. |
|
2nd mortgages |
There are 2nd trust
deed (mortgages) available and will go as high
as 125% of the value of your home. |
|
No document loans |
Loans are available
that require little or no documentation. These
loans are offered at a higher rate and less of a
loan to value (LTV). |
Less than A credit
(sub prime) |
Most lenders offer
program for less than perfect credit. The
severity of the problem will dictate the rate,
loan to value (LTV) and origination costs. Make
sure and shop. |
Some broker/lenders
do business in more
than one state. |
There are many very
successful broker/lenders that maintain a single
state office address yet are licensed to do
business in multiple states. These mortgage
sources often offer the best rates and prices
because of the lack of extra overhead. |
|
VA home loans. |
The Veteran's
Administration will guarantee home loans for
those men and women who have or are serving in
the military. Up to 100% of the home's purchase
price can be financed. There are strict
limitations on fees that can be charged. For
more information check with the
VA. |
|
FHA
home loans. |
A government loan
guarantee program for 1st time home buyers.
Liberal qualifying terms make this an attractive
program. Ask your broker for the details or
check with the
FHA. |
