As you search for a mortgage keep in mind that the type of mortgage will often overlap. A mortgage consultant can best determine the loan to fit your home purchasing needs.
Fixed-rate mortgage- the interest rate remains fixed for the life of the loan.
predictable monthly payments of principal and interest throughout the life of the loan
protection from rising rates. as the market rates fluctuate your interest rate stays the same
good for borrowers who plan to stay in their homes for a long period of time
Adjustable-rate mortgage- the interest rate adjusts periodically to reflect market conditions on pre-determined dates.
low introductory rate which will adjust periodically base on a market index
borrowers are protected from steep increases in rates through annual and lifetime adjustment caps
the initial rate is usually locked in for different periods, one three, five, seven or ten years the rate will then readjust annually after the introductory period
due to the introductory periods lower rate, some borrowers may be eligible for a larger loan amount with an ARM than with a fixed-rate mortgage
appropriate for borrowers who may want to sell or refinance early, able to afford larger monthly payments after the rate adjusts
Jumbo loan- loans that exceed a specified size aka conforming loan amount
rates are generally higher on jumbo loans than on smaller comparable loans
FHA loan- Federal Housing Administration (FHA) insures the mortgage. this type of loan is designed to meet the needs of homebuyers with lower moderate incomes
low down payment requirement
loan limit based on geographic location
liberal qualifying guidelines
use of gift funds for down payment and or closing costs
VA loan- Department of Veterans Affairs guarantees mortgage for qualified veterans and active duty military personnel and their spouses who are first or second time homebuyers
low or no down payment requirements
wide range of rate, term and cost options
flexible qualifying guidelines
use of gift funds for closing costs
Alternative financing- programs that are designed for borrowers with less than perfect credit, excessive debt, previous bankruptcy, foreclosure or tax delinquency
No Documentation Loans- programs for borrowers who are self-employed on commission or whose financial situation may be difficult to document. this type of loan allows borrowers to apply for a loan based on their credit history and stated income
While shopping for a mortgage ask about points. A point is 1% of the loan amount. The more pints you can pay the lower your rate will be. Paying points is an option not a requirement.
Ask about the annual percentage rate (APR) and the interest rate. The interest rate determines the amount of your monthly payment, the APR adds in the other costs required to make the loan to determine your loans total finance charge, expressed as a percentage over the scheduled life of your loan.
Locking or floating. A lock will give you a specified period of time 30 to 120 days to protect from financial market fluctuations in interest rates by setting the range of pricing available to you.
A float will make your rate fluctuate with the market. Floating offers an option of locking at a lower level if rates should decrease. However, you could pay a higher interest rate if the interest rates rise before you lock.
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Questions or comments write or email:
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