THE MOST COMMON PROGRAMS AVAILABLE TODAY ARE:
30
Year Fixed Rate Program
30 year fixed mortgage is a type of mortgage loan that
is repaid by the borrower making 360 equal monthly payments
over a period
of 30 years. Since the borrower's payments are 'fixed',
the borrower can expect to make the same monthly payment for
the entire term
of the loan. A 30 year mortgage loan is the most widely
accepted program used to finance a residential purchase, and
is available
for conventional and jumbo loans.
15 Year Fixed Rate Program
A 15 year fixed mortgage is a type of mortgage loan that
is repaid by the borrower making 180 equal monthly payments
over a period
of 15 years. Since the borrower's payments are 'fixed',
the borrower can expect to make the same monthly payment for
the entire term
of the loan. A 15 year mortgage loan is the most widely
accepted program used to finance a residential purchase, and
is available
for conventional and jumbo loans.
1, 3, 5, 7, 10 Year Adjustable Rate Loan Programs
An Adjustable Rate Mortgage (ARM) is a mortgage loan that
is most widely known for its low starting interest rate (when
compared
to the 30 & 15 year mortgage loans). This 'low' introductory
rate is used to calculate the mortgage payment for a specified
period of time. Once this introductory period is over, the
interest rate
is adjusted periodically based on a preselected index.
The most commonly used index is the yield on the one-year
Treasury Bill.
The new interest rate is determined by adding this index
to a set margin (which is determined by the lender). Although
there are a
variety of adjustable rate mortgage programs available,the
most common program is the One Year Adjustable Mortgage (one
Year ARM).
The interest rate on the one year ARM is adjusted once
each Year, for 30 years. APR's on variable rate loans are
subject to increase
but may decrease from year-to-year, the borrower should
be prepared to handle an increase in his/her monthly payment
(should the index
rate increase).
Jumbo Loan Programs
A jumbo mortgage is a mortgage loan which is larger than the
limits set by Fannie Mae and Freddie Mac (currently $300,700). Since
these two agencies will not purchase these types of loans, they
usually carry a higher interest rate (to enhance their value and
marketability to investors).
5/25, 7/23 Balloon Programs
A balloon mortgage loan is a type of mortgage loan that has a
short term (typically 5 or 7 years), but the monthly payment is
computed using a 30 year term. When a borrower uses a balloon loan,
he/she will make the monthly payment for the scheduled loan term
(5 or 7 years). When this loan term is over, the borrower is required
to pay off the remaining balance in one lump-sum payment. If the
borrower decides not to sell the property after the loan term is
over, the borrower has the option to refinance the mortgage with
a new one. A 7/23 balloon mortgage gives the borrower the option
to convert to a fixed rate program (for a nominal fee) after the
initial term (7 years) is over. If the conversion feature is used,
the interest rate for the remaining term of the loan (23 years)
will be adjusted once to reflect market conditions, then remain
fixed for the remainder of the loan term.
Let us help you through this complex world and advise you
on the best solution for your unique situation and individual
needs! Call
today for a Free Rate Analysis and see how much we can
help you save! Please contact us at 3888-888-8888 or
use our convenient online
contact form.
