Loan Types

Home loans got your head spinning? You're not alone. We all need a clear explanation of mortgage types before we take the plunge into the home buying market. We've compiled a solid list of resources to consider when understanding mortgage types.

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 Department of Veteran Affairs, but funded by a conventional lender.

30 Year Fixed Rate
The traditional 30-year fixed-rate mortgage offers total interest rate stability. If you intend to live in the home for an extended period of time, it's a good choice. The 30-year mortgage generally provides for the lowest monthly payments. Down payment can be as low as 3% for qualified persons.

15 Year Fixed Rate
With a 15-year mortgage, you own your home in half the time by paying a little more every month. Many people find that a shorter loan term offers them a significant financial advantage in accumulating equity and paying less interest over the life of their loan. The only drawback is that the monthly payments are higher than a 30-year mortgage. Down payment can be as low as 3% for qualified persons.

Adjustable Rate - 3/1, 5/1, 7/1, and 10/1 Fixed Term
The Adjustable Rate Mortgage programs provide for a lower fixed interest rate for a specified number of years (3, 5, 7 or 10 years) and then adjust up or down every year thereafter, based on the applicable index.

5 or 7 Year Balloon
Balloon mortgages offer the advantage of lower interest rates and lower monthly payments for the initial period.

1 Year ARM
The initial interest rate is generally very low and fixed for the first year and will be adjusted every year thereafter, based on the applicable index.

Jumbo Loan (loan's over $322,000)
If you need to borrow MORE than $322,700, you need what is called a JUMBO loan. Jumbo loans are offered in many different manners... such as the traditional 30 year or 15 year fixed-rate mortgage, which offers total interest rate stability.

If you intend to live in the home for an extended period of time, it's a good choice. The 30-year mortgage generally provides for the lowest monthly payments. Down payment can be as low as 5% for qualified persons.

Another option can be an Adjustable Rate Mortgages. The terms can be fixed for a specified length of time and then vary, according to market conditions.

100% Loan
There are numerous ways we can help you to avoid making a cash downpayment when you purchase a home. We can arrange for you to receive downpayment grants from non-profit agencies on some programs; or assist you in getting a purchase-money second mortgage on other programs; or we offer other programs do not require any downpayment, based solely on credit scores.

The information is constantly changing, and requires a mortgage professional to explain it all.

Self-Employed Loan
Getting a mortgage today normally requires two years of tax returns, P&L statements for the current year and sometimes even evidence of quarterly tax filings for self employed persons. And for those persons who can readily provide all this info we have low rates and great service to help finance or refinance your home.

For the rest of you, simply tell us how much you make and how much cash you have and eliminate all the hassles!

Construction Loan
Loans are available from $40,000-$800,000 for the construction of a personal residence. Interest rate is fixed for 1 year, low, low interest only payments on draws during first 6 months of construction and requires 20% downpayment.

Adjustable Rate Mortgage
ARMs, as they are generally called, offer you lower initial interest rates and payments, with the potential for adjustment at specified times during the life of the loan. Standardized ARMs provide for the interest rate to be fixed for three years, or five years, etc... then adjust annually thereafter (called a 3/1 ARM, or a 5/1 ARM, 7/1 ARM, and 10/1 ARM's)Whether your payments go up or down at the adjustment date depends on market conditions. There are limits (or "caps") on how much rates and/or payments can change at each adjustment interval . . . and over the life of the loan. In most cases, the initial ARM interest rate is lower than the current available fixed-rate.

An ARM may be an excellent choice if:

• You can benefit from a lower rate now to buy the home you want, and you anticipate rising future income.
• You're willing to accept the risk of rate increases and/or you expect rates to fall.
• You plan to stay in your home for a fairly short period of time.
• You're applying for a mortgage when fixed interest rates are relatively high.