Loan Products
We want to make sure home buyers know what options are available to them and that Realtors have the resources they need to discuss the types of mortgages available. Here are a few of the most popular products.
Please call us or email us to discuss these or other mortgage options.
If this is the right time for you to buy a home, then the right mortgage is out there for you. Let us help you find the right mortgage to keep you both happy in your home and financially secure.
Loan Types
Thirty-Year Fixed Loan
This is the most popular loan product available. The interest rate is "fixed," or the same for the entire 30-year term of the loan. With this loan, you know that your principal and interest portion will not change for 30 years. However, your payment may go up over time to accommodate higher taxes and insurance rates.
Fifteen-Year or Twenty-Year Fixed Loan
15- and 20-year fixed loan products offer lower interest rates than the 30-year fixed loan, but with a higher payment. These are good options if you would like to eliminate your mortgage debt quicker than 30 years. These often become good options for home buyers who are beginning to think about retirement.
(40 Year Term Loans are available but not recommended.)
Adjustable Rate Mortgages (ARM)
With an ARM, your interest rates adjust over time during the course of the loan. The biggest risk with an ARM is that your interest rate will rise. Adjustments can be at different increments – daily, monthly, every six months or annually. ARMs have an advantage over fixed loans when interest rates drop and your payment falls with them. However, they are a risk, and we do not recommend them often.
Hybrid ARMs
These products have a fixed amount of time before they start adjusting regularly. Most common hybrid ARMS are 3/1, 5/1 and 7/1. The first number represents the number of years the interest rate is fixed; the second number indicates how often the rate will adjust after the fixed period. For example, with a 3/1 ARM, the fixed rate will last for three years and then will adjust every year (every one year) for the next 27 years, or until the loan is paid off. The advantage of hybrid ARMs is that they typically offer a lower rate than a 30-year mortgage. If you know you will be in your home for a limited number of years and you can estimate how long this will be, you can save money on interest. The risk of the hybrid ARM is that the interest rate will rise. (Alternatively, it could go lower.)
Conventional
This term refers to any loan that runs through Fannie Mae or Freddie Mac. Typically requires at least 3% down payment and good to great credit scores.
FHA
FHA loans are insured by the Federal Housing Authority. They require a 3.5% down payment and are often used by first-time home buyers or people with less shaky credit.
FHA 203k
FHA rehabilitation loans are like standard FHA loans and require a down payment of 3.5 percent, but the money loaned is used to make home repairs.
VA
VA loans are only for active military and veterans. They are guaranteed by the Veterans Administration and do not require a down payment. They provide 100 percent financing.
Jumbo
A jumbo loan is any loan larger than $417,000. These do not go through any of the government organizations and typically have higher interest rates than conventional or government loans.
Reverse Mortgages
These are home loans that provide cash payments based on home equity. Homeowners normally defer payment of the loan until they die, sell or move out of the home. Upon the death of homeowners, their heirs either give up ownership to the home or must refinance the home to purchase the title from the reverse mortgage company. These are highly regulated and you must be at least 62 years old to qualify, and you are required to go through counseling about the loan prior to securing one.