Mortgage Programs

Fixed Rate Mortgage

Explained:
A fixed rate mortgage is beneficial to those who are looking for stability in their monthly payment, which will not go up or down through out the life of the loan. Typically, if you plan to live in your home for a long period of time, a fixed rate is optimal.

Advantages:

  • Interest rate does not change
  • Payments remain the same
  • If interest rates drop, you may be able to refinance
  • If interest rates rise, your rate is protected
Disadvantages:

  • Slightly higher interest rate
  • Slightly higher payments
  • Rates do not decrease if interest rates drop
Term Lengths:
10, 15, 20, 25, 30 years

Adjustable Rate Mortgage

Explained:
Adjustable Rate Mortgages (ARMs) typically have a low interest rate for a fixed amount of time at the beginning of the loan. After this time, the rate then adjusts every year, depending on the current market conditions. This product is good for someone who plans on living in their house for a short period of time or those who don’t mind the variability of their payments in exchange for the initial low rate.

Advantages:

  • Lower initial monthly payment
  • Rates and payments may go down if rates drop
  • May qualify for larger loan amount
  • 30 year term, no balloon payment
Disadvantages:

  • More risk
  • Payment may change over time
  • Potential for higher payment if rates increase
Term Lengths:
5/1 and 7/1 ARM

Federal Housing Association (FHA) Mortgage

Explained:
The FHA mortgage is a loan that is guaranteed by the government. Another advantage to an FHA mortgage is that you can qualify for the loan with limited funds for a down payment (3.5%) though there are limits to the loan amount. Also, due to more relaxed qualifying guidelines, those with less than perfect credit are able to qualify.

Advantages:

  • Easier to qualify
  • Smaller down payment
  • Greater loan to value
  • Ability to Streamline refinance (see below)
Disadvantages:

  • Upfront mortgage insurance is required
  • Monthly mortgage insurance is required for a specified period of
    time regardless of down payment or equity in home.
Term Lengths:
Fixed: 10, 15, 30 years

FHA Streamline
This allows people with FHA mortgages to refinance to a lower rate with no costs, no new credit report and no new appraisal.

Advantages:

  • Lower monthly payments
  • No costs
  • No income or credit qualifying
Disadvantages:

  • None
Term Lengths:
10, 15, and 30 years

Department of Veteran Affairs (VA) Mortgage

Explained:
Similar to the FHA mortgage, a VA mortgage allows veterans with low income and blemished credit to qualify for a loan.

Advantages:

  • Easier to qualify
  • No down payment on loans up to $417,000
  • Interest rates are similar to conventional loans
  • Eliminates PMI and MIP (monthly mortgage insurance
Disadvantages:

  • Loan process time is longer
  • More demanding appraisal standards
  • Upfront VA funding fee

Jumbo Mortgage

Explained:
A jumbo mortgage is a mortgage that exceeds the loan amount maximum for a conforming loan, set forth by Fannie Mae and Freddie Mac. Because of this, the interest rate typically is higher and has different requirements for down payments.

Advantages:

  • Allows you to finance higher loan amounts
  • Prevents you from liquidating your assets for a down payment
Disadvantages:

  • Higher interest rate
  • Higher loan balance
Term Lengths:
Fixed: 15, 30 years
ARM: 5/1 and 7/1