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ØMortgage types.
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Fixed Rate Mortgages
Features:
The interest rate on a fixed rate mortgage remains constant over the life of the loan.
Your monthly principal and interest payment will always remain the same through the term of the loan.
Benefits:
Fixed rate mortgages are especially suited for those who expect to remain in their homes for a number of years.
You can provide a down payment as low as 5% on the purchase price. And, if you don't qualify for the 5% down program, this can be solved by gift from a relative, an employer-sponsored loan, or a grant from a non-profit organization.
Advantages:
Your mortgage payment is unaffected if interest rates in the general market go up.
Your monthly payments are set, so you can more easily budget your finances.
Adjustable Rate Mortgages (ARMs)
Feature:
An interest rate that fluctuates over time.
Benefit:
Generally, the initial interest rate is lower than that of a fixed rate mortgage. The lender bases its calculations on the index and margin of the mortgage. The index is a base rate that the lender adds to the margin at each adjustment period to determine a new interest rate. Be sure to check the type of index your mortgage lender is using, because some fluctuate more than others.
Advantages:
The interest rate you pay will generally drop if prevailing interest rates go down.
Low start rates can reduce your initial payments.
Balloon Mortgages
Feature:
Principal and interest payment remain constant for the term of a balloon mortgage which is usually 5-7 years, although principal and interest are amortized over 30 years.
Benefit:
At the end of the 5-7 years, you can pay off the mortgage or apply to refinance.
Advantages:
Balloon mortgages are typically offered at lower interest rates than other fixed rate products, making them more affordable.
If you know you'll be in your home for less than the term of the mortgage, this may be the product you should consider.
Home Loan Payment Relief (HLPR) Mortgage
Feature:
A three-year adjustable rate mortgage at one percentage point below the national average for such loans.
After three years, the rate will adjust annually to market rates, with rate adjustments capped at 1% per year, and 5% over the life of the loan.
Benefit:
At the end of the 5-7 years, you can pay off the mortgage or apply to refinance.
Advantages:
Enjoy home ownership sooner.
Save money with an affordable rate.
Features:
The interest rate on a fixed rate mortgage remains constant over the life of the loan.
Your monthly principal and interest payment will always remain the same through the term of the loan.
Benefits:
Fixed rate mortgages are especially suited for those who expect to remain in their homes for a number of years.
You can provide a down payment as low as 5% on the purchase price. And, if you don't qualify for the 5% down program, this can be solved by gift from a relative, an employer-sponsored loan, or a grant from a non-profit organization.
Advantages:
Your mortgage payment is unaffected if interest rates in the general market go up.
Your monthly payments are set, so you can more easily budget your finances.
Adjustable Rate Mortgages (ARMs)
Feature:
An interest rate that fluctuates over time.
Benefit:
Generally, the initial interest rate is lower than that of a fixed rate mortgage. The lender bases its calculations on the index and margin of the mortgage. The index is a base rate that the lender adds to the margin at each adjustment period to determine a new interest rate. Be sure to check the type of index your mortgage lender is using, because some fluctuate more than others.
Advantages:
The interest rate you pay will generally drop if prevailing interest rates go down.
Low start rates can reduce your initial payments.
Balloon Mortgages
Feature:
Principal and interest payment remain constant for the term of a balloon mortgage which is usually 5-7 years, although principal and interest are amortized over 30 years.
Benefit:
At the end of the 5-7 years, you can pay off the mortgage or apply to refinance.
Advantages:
Balloon mortgages are typically offered at lower interest rates than other fixed rate products, making them more affordable.
If you know you'll be in your home for less than the term of the mortgage, this may be the product you should consider.
Home Loan Payment Relief (HLPR) Mortgage
Feature:
A three-year adjustable rate mortgage at one percentage point below the national average for such loans.
After three years, the rate will adjust annually to market rates, with rate adjustments capped at 1% per year, and 5% over the life of the loan.
Benefit:
At the end of the 5-7 years, you can pay off the mortgage or apply to refinance.
Advantages:
Enjoy home ownership sooner.
Save money with an affordable rate.
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