Loan Programs

Today's real estate market offers you, the consumer, more loan program choices than ever before. Here are some examples and descriptions of some of the offerings available to you.

Fixed-Rate Mortgages
The interest rate and your monthly mortgage payments remain fixed for the period of the loan. Fixed-rate mortgages are available for 30, 25, 20, 15, and 10 year terms. As a general rule, the shorter the term of the loan, the lower the interest rate you could get.
The most popular mortgage terms are 30 and 15 years. The traditional 30 year fixed-rate mortgage provides you with monthly payments that are lower than they would be on a shorter term loan. However, if you can afford a higher monthly payment, a 15 year fixed-rate mortgage enables you to repay your loan twice as fast and you will save more than half the total interest cost of a 30 year loan.

Adjustable Rate Mortgages
An adjustable (also called a variable) rate loan is a loan where the interest rate, and accordingly your monthly payments, fluctuates over the period of the loan. These loans generally star out with an interest rate lower than a fixed-rate loan which saves you money early on and may help you qualify for a more expensive home. As the market rate goes up or down, your payments will also change at each scheduled adjustment. The most popular of these loans will be initially fixed for a period of 1,3,5,7 or 10 years prior to adjusting. With these programs, periodic adjustments are based on an index, such as the one year treasury bill, plus a margin in order to determine the new rate. In order to protect you, there are annual and lifetime rate caps that limit the amount your payment can go up or down. The mid range ARM is a perfect choice for the buyer who does not plan to be in a home more than five to seven years.
One of the more creative products is called the Option ARM and doesn’t require a set payment each month. After the first payment you receive four payment options to choose from each month: 1. minimum payment required 2. interest only payment 3. 30 year amortization 4. 15 year amortization. While this is the most flexible loan program on the market, it also carries the greatest risk because the rate can change monthly.

Interest Only
Numerous lenders have recently come out with interest only programs that allow the borrower to pay the interest due every month while allowing the principle balance to remain the same. In other words, there is no amortization of the principle balance during the initial stages of this loan. At some point, generally after ten years, these loans convert to an amortizing loan for the remaining term of the loan. These programs are very popular right now and allow the buyer to qualify for a more expensive home.

FHA
The Federal Housing Administration( FHA ), which is part of the U. S. Department of Housing and Urban Development ( HUD ), administers and insures various loan programs. FHA loans require a lower down payment, the purchaser is only required to invest 3% of the sales price into the transaction, and are easier to qualify for than conventional loans. Fixed and ARM loan programs are available.

VA
VA loans are guaranteed by the U. S. Department of Veterans Affairs. The guaranty allows veterans and service personnel to obtain home loans with favorable terms, usually without a down payment. In addition, it is easier to qualify for a VA loan than a conventional loan.

Sub Prime Loans
A wide variety of program options are available for buyers with special program needs. A past bankruptcy, collection accounts or other past difficulties do not create an insurmountable obstacle to obtaining mortgage financing in many cases. If you have had past financial difficulties and feel you are on the path to recovery, it is very possible that we can help you successfully purchase a new home.