What
Are My Home Loan Options
There are several mortgage loan choices available
to new and existing homeowners today. It can
be challenging to navigate through the maze to discover
which type of mortgage loan option is best suited
to your needs. Here are some commonly used home
mortgage loan choices:
| Fixed-Rate
Mortgages |
Interest
rates stay the same for the term of the
loan.
Constant
monthly payments for the life of the loan.
Security
against rising interest rates.
Fixed-rate
loans are a good refinance option when rates
are low.
|
|
Adjustable
Rate Mortgage (ARM) |
Offers
a lower initial rate then a fixed-rate mortgage
Initial
rate is fixed for an introductory period
After,
the fixed introductory period, the interest
rate adjusts episodically based on market
conditions.
ARMs
are a good choice during periods of low
interest rates.
|
|
Interest-Only
Mortgage Loans |
You
pay only the interest on the mortgage in
monthly payments for a fixed term (generally
five to seven years).
At
the end of that term: you can pay the lump
sum balance, refinance, or start paying
off the principal.
|
|
Conforming
Loans |
Mortgage
loan amount eligible for purchase by either
Fannie Mae or Freddie Mac
Limits
are reviewed annually, if needed be, limits
are changed to reflect changes in national
mean price for single family homes.
Limits
based on the October-to-October changes
in mean home price.
|
|
Jumbo
Loans |
Mortgage
loan amount above the limits of Freddie
Mac and Fannie Mae
Commonly
known as non-conforming loans
Usually
subject to an interest rate pricing premium
and certain underwriting restrictions
|
|
Second
Mortgage |
Mortgage
loan taken out after the first mortgage
Second
mortgage loan is secured against the same
asset as the first mortgage loan
Mortgage
loan is based on the amount of equity or
ownership interest you have in your home
Commonly
used for debt consolidation, paying for
college tuition, major purchases, home improvements,
and other purposes
|
|
Subprime
Mortgages |
Mortgage
loans available to consumers who do not
meet prime financing criteria.
Failure
to meet the criteria for prime financing
is due mainly to low credit scores.
Usually
the mortgage loan is accompanied with a
higher interest rate than prime financed
mortgage
|
|
Hybrid
Mortgage Loans |
Hybrid
mortgage loans are a combination of fixed
rate and ARM loans.
Initial
term of the loan is at a fixed rate after
which the loan becomes an ARM.
|
|
100%
Financing |
Zero
down payment - offers complete financing
of your property
No
Cash needed for down payment
To
qualify, you must have a credit score of
620 or higher
Ideal
to have four to six months of cash reserves
|
|
Conventional
Loans |
Mortgage
loan that is not guaranteed or insured
by the federal government
Usually
requires a bigger down payment than a guaranteed
government loan.
Interest
rates can exceed those of FHA and VA loans.
|
|
Government
Loans |
Mortgage
loan that is guaranteed or insured by the
federal government
|