Services
Fixed Rate Loans: A
fixed rate mortgage provides you with a stable
interest rate and payment that will not change over
the life of the loan. Typically they are 15 or 30
year mortgages. Reasons to choose this type of a
loan are if:
- You are on fixed income
- You plan on staying in the home for 10+
years
- Interest rates are low
|
|
Adjustable Rate Mortgage
Loans (ARM): An adjustable rate mortgage
usually carries an interest rate that is 1 to 3
percent lower than a fixed rate loan. It is
usually fixed for a certain amount of time
before the payment becomes adjustable. This
could be anywhere from 6 months to 10 years.
After the initial fixed period the rate becomes
adjustable and is set at a certain margin over a
given index. These indices are usually the
Cost-of-funds-index, 1 year T-Bill, LIBOR, or
other similar index. Reasons to choose this type
of loan are if:
- Interest rates are high
- You plan on refinancing soon
- You plan on staying in the home for a
short while
- You are a first-time home buyer
- You need to qualify for a higher loan
amount
|
|
Interest-Only Loans:
With an Interest-Only loan, only the interest is
paid on the loan, while the loan amount neither
increases or decreases. Typically they are also
adjustable rate mortgages and are only at a
fixed rate for a certain amount of time. Reasons
to choose this type of a loan are if:
- You would like to qualify for a higher
loan amount
- You can achieve a higher rate of return
on an investment than your mortgage rate
- Your income is increasing annually and
will be able to afford a higher payment in
the future
- It is the only way you can enter in the
housing market
|
|
Stated Income Loans:
A stated income loan is designed for persons who
have a hard time documenting their income. With
this type of a loan, income documentation such
as W2s, paystubs, or tax returns are not
required. Typically they have slightly higher
rates and payments due to more risk to a lender.
|
|
No point- No fee loans:
A no-point loan is a loan that requires no
lender origination fees. A No-fee loan has no
fees associated with the loan. The disadvantage
to these loans is that they have higher rates
and higher fees. These are good loans if you
only plan on staying in the home for a short
while or you plan on refinancing soon. However,
due to the higher interest rates and payments
associated with the loan, over the long term, it
might be better to pay fees or points.
|
|
|
Home Equity Line of Credit:
A HELOC is a loan typically that is in addition
to your first mortgage. It uses the equity from
your home as sort of a checking account. The
line is set to a certain amount from $10,000 to
$200,000 depending on how much equity you have
and other parameters. The rate is variable and
is typically tied to the prime rate. The main
advantage to this loan is that you only pay
interest on the amount that you borrow from your
line. For instance, you might have a $20,000
line and you only borrow $10,000 from your line,
you would only pay interest on the $10,000.
|
|
|
|
