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Mortgage Options & Loan Types |
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30-year conventional fixed rate loan - benefits include:
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Monthly payments for principle and interest remain the same over
the life of the loan
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Lower monthly payments when amortized over a 30-year payment
period.
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10, 15 or 20-year conventional fixed rate loans - Benefits
include:
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Monthly payments of principle and interest remain the same over
the life of the loan
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Substantial savings of interest over the life of the loan
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Payments are approximately 25-30% higher when amortized over a
shorter period of time.
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No-Point/Zero Closing Cost loan - Benefits include:
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Less cash needed at closing. The interest rate will usually be ½
to ¾ of a percent higher when compared to loans that have points
to pay at closing.
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7-year fixed rate balloon w/ 30-year amortization - Benefits
include:
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Slightly lower rate and/or less fees than the conventional 30-year
fixed rate loan.
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Payment of principle and interest remains the same over the 7-year
period of time (at the end of 7 years, you will need to pay off
the remaining balance with either a lump sum of cash or re-finance
the remaining loan amount).
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Adjustable Rate Mortgages (ARM) - There are many options with ARMs;
the most popular tends to be the 1-year ARM with a 30-year
amortization schedule. Benefits include:
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Lower interest rate for the 1st year
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Easier to qualify for the loan amount
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You can qualify for a larger loan amount
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A year ARM offers the ability to adjust downward at the 1 year
anniversary of your loan.
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80/10/10 Conventional Loans
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a loan program that
consists of an 80% first mortgage + a 10% second mortgage + a 10%
down payment. In this case, since there is no mortgage insurance
required, the buyer will save the monthly premium.
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Key Components to Most Adjustable Rate
Mortgages (ARM): |
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Index Rate - the rate to
which the interest rate on an adjustable rate loan is tied. One of
the more popular indexes used is the 1-year U.S. Treasury bill.
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Margin - the amount
added to the index rate that represents the lender’s cost of doing
business.
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Interest Rate Cap Per
Adjustment - the maximum amount a borrower’s interest rate may
increase or decrease at the time of adjustment..
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Life Cap - this is the
ceiling that the note rate cannot exceed over the life of the loan.
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Amortization - a period
of time in which gradual repayment of debt occurs by means of
systematic payments of principle and/or interest. At the end of the
time period the balance is zero.
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What Your Monthly Mortgage Payment
Consists of: |
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Principle balance: this represents the money you originally borrowed
and are paying back over the life of the loan.
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Real estate taxes: normally 1/12 of the most recent tax bill.
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Insurance (Home Owners): normally 1/12 of the yearly policy amount.
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Private Mortgage Insurance (PMI) - Some borrowers who have less than
20% down are required to pay PMI.
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Assessments (if any, condo, townhome, single family home) -
depending on the type of dwelling, you may or may not be required to
pay assessments.
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Questions to Ask Lenders |
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Based on our situation, what looks like the best program for us &
why?
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What is the projected time for processing and closing a loan?
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What is the projected time for processing and closing a loan?
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If PMI (Private Mortgage Insurance) is required, when and how does
it go away?
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What about your rates, terms, fees, etc - are they negotiable?
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Are there any special underwriting guidelines you follow?
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What if rates go down during the “lock-in” period?
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What do you need from us to get our loan approved?
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Need to pre-qualify for a loan?
Call me at 303.520.3179
or one of my preferred mortgage loan brokers who can help you get
pre-qualified for a loan.
There is absolutely no charge or obligation and the entire
process will take less than 10 minutes of your time.
Ashley Hickmon,
Crestline Mortgage - 303-669-8454
Tony
Rivera, Bank of the West - 720-205-1900
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