Loan Program

Fixed Rate Mortgage

Explained:
A fixed rate mortgage is beneficial to those who are looking for stability in their monthly payment, which will not go up or down through out the life of the loan.  Typically, if you plan to live in your home for a long period of time, a fixed rate is optimal. 

Advantages:
  • Interest rate does not change
  • Payments remain the same
  • If interest rates drop, you can refinance
  • If interest rates rise, your rate is protected
 Disadvantages:
  • Slightly higher interest rate
  • Slightly higher payments
  • Rates do not decrease if interest rates drop

Term Lengths:
10, 15, 20, 25, 30, 40 years

Adjustable Rate Mortgage

Explained:
Adjustable Rate Mortgages (ARMs) typically have a low interest rate for a fixed amount of time at the beginning of the loan.  After this time, the rate then adjusts every year, depending on the current market conditions.  This product is good for someone who plans on living in their house for a short period of time or those who don’t mind the variability of their payments in exchange for the initial low rate.

Advantages:                                                         
  • Lower initial monthly payment
  • Rates and payments may go down if rates drop
  • May qualify for larger loan amount
  • 30 year term, no balloon payment
 Disadvantages:   
  • More risk
  • Payment may change over time
  • Potential for higher payment if rates increase

Term Lengths:
10/1, 7/1, 5/1, 3/1 and 1 year ARM

Federal Housing Association (FHA) Mortgage

Explained:
The FHA mortgage is a loan that is guaranteed by the government, eliminating the need for private mortgage insurance.  Another advantage to an FHA mortgage is that you can qualify for the loan with limited funds for a down payment (3.5%) though there are limits to the loan amount.  Also, due to more relaxed qualifying guidelines, those with less than perfect credit are able to qualify.

Advantages:
  • Easier to qualify
  • Smaller down payment
  • Greater loan to value
  • Ability to Streamline refinance (see below)
 Disadvantages:
  • Upfront mortgage insurance is required
  • Monthly mortgage insurance is required for 5 years regardless of down payment or equity in home.

Term Lengths:
Fixed: 10, 15, 30 years

FHA Streamline
This allows people with FHA mortgages to refinance to a lower rate with no costs, no new credit report and no new appraisal.

Advantages:                                         
  • Lower monthly payments
  • No costs
  • No income or credit qualifying
 Disadvantages:
  • None

Term Lengths:
10, 15, and 30 years

Department of Veteran Affairs (VA) Mortgage

Explained:
Similar to the FHA mortgage, a VA mortgage allows veterans with low income and blemished credit to qualify for a loan.

Advantages:                                                          
  • Easier to qualify
  • No down payment on loans up to $417,000
  • Interest rates are similar to conventional loans
  • Eliminates PMI and MIP (monthly mortgage insurance
 Disadvantages:
  • Loan process time is longer
  • More demanding appraisal standards
  • Upfront VA funding fee

Reverse Mortgage

Explained:
A reverse mortgage is designed for homeowners over the age of 62 to take advantage of the equity that they have built in their home.  With a reverse mortgage, you no longer make monthly payments and instead receive tax free income in either a lump sum or in multiple payments.  The title of the house remains yours.  The obligation to repay the loan is deferred until the last borrower on the loan is deceased, the house is no longer the borrower’s primary residence or the house is sold.

Advantages:                                          
  • No monthly payments
  • Money received is tax free
  • You keep ownership of the home
  • No income, credit or health questions
  • No repayment while you are in the home
 Disadvantages:
  • Higher costs
  • Reduces equity left for your heirs

Jumbo Mortgage

Explained:
A jumbo mortgage is a mortgage that exceeds the loan amount maximum for a conforming loan, set forth by Fannie Mae and Freddy Mac.  Because of this, the interest rate typically is higher and has different requirements for down payments.

Advantages:                              
  • Allows you to finance higher loan amounts
  • Prevents you from liquidating your assets for a down payment
 Disadvantages:
  • Higher interest rate
  • Higher loan balance

Term Lengths:
Fixed: 15, 30years   ARM: 7/1, 5/1 and 3/1

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