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 (952) 261-8830 or use our convenient online
contact form.
