With a fixed rate mortgage, you know exactly what your principal and interest payment will be each month for the life of your loan. It won’t change because your interest rate doesn’t change. Your taxes and insurance component of your payment towards escrow can change (and probably will) if your taxes and insurance change. Unfortunately, there’s no way to lock those in. If interest rates go up, you’re protected with a fixed rate mortgage. But, you won’t benefit if rates go down. You can always take advantage of falling rates by refinancing.
Fixed rate mortgages might be right for you if:
Adjustable Rate (ARM)
Compared to fixed rate mortgages, Adjustable Rate Mortgages (ARMs) offer a lower interest rate to start, so your monthly payments are generally lower. But, the interest rate moves up and down with the market based on an “index”. Some of the more common indices include U. S. Treasury Bills, Cost of Funds Index (COFI) and the London Interbank Offered Rate (LIBOR). Most ARMs have an initial fixed rate period where the interest rate doesn’t change followed by the rest of the loan’s lifetime period where the rate is adjusted at predetermined intervals. Many ARMs have caps that limit how much your interest rate can change per period as well as for the life of the loan.
Also be aware that there are some very low rates ARMs that start out with “discounted” rates. These discounted rates are below the market rate and will definitely go up at the first adjustment period.
Adjustable rate mortgages might be right for you if:
The Federal Housing Administration (FHA) provides a loan guarantee program instead of the standard private mortgage insurance (PMI) so qualified borrowers can get a mortgage loan with a down payment as low as 3%. The FHA doesn’t make the loan but rather they guarantee the loan minimizing the lender’s financial risk. FHA loans usually offer fairly liberal qualifying criteria compared to Fannie Mae and Freddie Mac and involve small down payments. The offer both fixed and adjustable loans.
The US Department of Veteran Affairs (VA) guarantees loans for more than 22 million veterans and active service members and their families. VA loans are one of the few mortgage options for borrowers who cannot or would prefer not to make a downpayment. A VA loan also does not require mortgage insurance which translates to a significant savings in monthly payments.
The USDA Rural Development Guaranteed Housing Loan Program provides financing for eligible suburban and rural home buyers. The repayment and closing costs are comparable to conventional loans, but the benefits are simpler loan approval standards and up to 100% financing at better-than-average rates.
A Jumbo Mortgage is simply a mortgage that exceeds the loan limits set by the two publicly chartered corporations (Fannie Mae and Freddie Mac) that buy mortgage loans from lenders. The loan limits vary by locality. The national 2014 single family loan limit is $417,000, but the amount is greater for King County, WA which has a loan limit of $506,000. If you wish to borrow more than the limit in your locality, you will need a jumbo mortgage. We work with a number of lending partners who specialize in providing competitive jumbo options.
Stated Income Jumbo
Stated Income loans are designed for those borrowers who have liquid assets, but do not otherwise fit in your typical loan scenario box, generally self-employed individuals and those with very complex tax returns. Usually a larger down payment is required than with other types of loans. However, these programs make financing available where it might otherwise not have been to those who can simply demonstrate a certain threshold of liquidity.
We can offer financing for foreign nationals with no credit and limited income verification. Borrowers are not required to have a Green Card, Social Security Number or Visa. We will need four credit references and at least two years of income verification, which may take the form of your tax returns from your home country, paystubs, bank statements or an employment letter.
Construction loans are used to finance the building of a new home rather than purchase an existing home. They are usually variable-rate loans that have interest only payments during the construction phase. Draws are scheduled based on the stages of construction to pay the builders. Many construction loans are construction-to-permanent which means that when construction is complete, the loan is converted to a normal mortgage. This has the advantage of a single loan with one closing.
Different from personal loans or consumer credit loans, a commercial loan is extended to business units for the purpose of financing for inventory purchases, movement of goods, and commercial real estate.