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In believe in leaving
the specifics of financing up to the finanical expert you've applied for
your Mortgage with.
However,
I wanted to share an overview of the breadth of available mortgage options.
Your
Loan Officer, will discuss the specifics and help you decide which one
works best for you.
Fixed
Rate Loan
A
fixed-rated mortgage comes with an interest rate that remains the same
for the life of the loan.
Traditionally
the life or term of a mortgage was 30 years. Today you can choose from
10-year, 15-year, 20-year-,
30-year, 40-year and even 50-year fixed-rate mortgages.
FHA
Loans
FHA
mortgage loans are insured by the government through mortgage insurance
that is funded into the loan. First-time home buyers are ideal candidates
for an FHA loan because the down payment, no income limits, FICO scores
can be lower than for a conventional loan
VA
Loans
This
type of government loan is available to veterans who have served in the
U.S. Armed Services and, in certain cases, to spouses of deceased veterans.
The requirements vary depending on the year of service and whether the
discharge was honorable or dishonorable. The main benefit to a VA loan
is the borrower does not need a down payment. The loan is guaranteed by
the Veterans Administration, but funded by a conventional lender.
Option
ARM Mortgage
Has
interest rates that adjust up or down, depending upon current economic
trends. An ARM's rate is based on a money market index, borrowers can
choose from a variety of payment options and index rates. But beware of
the minimum payment option.
The
interest rate can move up or down monthly, semi-annually, annually or
remain fixed for a period of time before it adjusts. The adjustment period
is disclosed in the loan.
ARMs
generally have limits or "caps" on how high it can adjust during
each adjustment period as well as over the life of the loan.
Combo
/ Piggyback Mortgage Loan
This
type of mortgage financing consists of two loans: a first mortgage and
a second mortgage. The mortgages can be adjustable-rate mortgages or fixed-rate
or a combination of the two. Borrowers take out two loans when the down
payment is less than 20% to avoid paying private mortgage insurance.
Mortgage
Buydowns
Borrowers who want to pay a lower interest rate
initially often opt for mortgage buydowns. The interest rate is reduced
because fees are paid to lower the rate, which is why it's called a buydown.
Buyers, sellers or lenders can buy down the interest rate for the borrower.
Streamlined-K
Mortgage Loans
Like the 203K loan program, FHA has another
program that provides funds to a borrower to fix-up a home by rolling
the funds into one loan. The dollar limits for repair work are lower on
a Streamlined-K loan, but it requires less paperwork and is easier to
obtain than a 203K.
Bridge
/ Swing Loans
These
types of mortgage loans are used when a seller has put a home on the market
-- but it has not yet sold -- and the seller wants to borrow equity to
buy another home. The seller's existing home is used as security for a
bridge (also called swing) loan.
Equity
Mortgage Loan Types
Equity
loans are second in position and junior to the existing first mortgage.
Borrowers take out equity loans to receive cash. The loans can be adjustable,
fixed or a line of credit from which the borrower can draw funds as needed.
Reverse
Mortgages
Reverse
mortgage are available to any person over the age of 62 who has enough
equity. Instead of making monthly payments to the lender, the lender makes
monthly payments to the borrower for as long as the borrower resides in
the home. The interest rate can be fixed or adjustable.
Private
mortgage insurance
Be
sure that you’re aware of Private Mortgage Insurance (PMI). You may
require this insurance if you’re applying for a low down payment
mortgage to protect the lender in case you default on your loan. It is
usually required on mortgages with a down payment of less than 20 percent.
The good news is that once you’ve paid down your mortgage to the
point where you achieve 20 percent equity in your home, most lenders will
allow you to cancel the insurance.
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