Fixed rate:
These loan programs are fixed for the entire term of the loan. Choices include 30, 20, 15, and 10 year terms. The rates will not change during the life of the loan.
Adjustable Rate Mortgages:
Referred to as ARMs, these loans are fixed only for a short period of time, typically 6 months to 10 years. They will be amortized over a 30 year term. ARMs will have lower start rates than fixed rate mortgages, but will adjust to current market rates when the fixed period has expired.
Fixed Period - Most ARMs have initial period in which the rate and payments are fixed. This period could last for 1 year, 3 years, 5 years, 7 years, or even 10 years. The rate will not change during the fixed period, but may change when that period ends.
Adjustment Period - After the fixed period of an ARM ends, the interest rate will adjust periodically at a set time, usually every 12 months.
Index - The changes in rate on an ARM are based on an index. This index could be the 1 year Treasury index, the LIBOR, or a Cost of Funds Index specific to the bank. The index is used to determine the note rate only at the time of the adjustment, not during the fixed period. If the index rate goes up, then your payment may go up as well. Consequently, if the index drops, your payment may go down. Current indices such as the T-Bill and LIBOR can be found in the Wall Street Journal.
Margin - At the time of the adjustments, the bank will add a predetermined amount to the index to arrive at your new rate. When shopping for ARM rates, be sure to compare margins as well. For example, if two lenders are using the same index but Bank A has a higher margin than Bank B, you will pay a higher interest rate in the future with Bank A.
Caps - Interest rate caps limit the amount that your ARM rate can increase or decrease. There are two kinds of caps:
- periodic caps, which limit the amount of movement from one period to another, and…
- lifetime caps, which limit the increases in rates for the life of the loan.
Interest only:
This loan allows the borrower to pay only the interest on the mortgage for a set period of time. Principle payments can be made at any time. The interest only period typically lasts for 10 years. During this time period, the rate may be fixed or may adjust frequently, sometimes on a monthly basis. After the interest only period, the borrower must make principle and interest payments on the remaining balance. Since interest only loans are not for everyone, please contact us to see if this product would be beneficial.
Stated Income:
These programs are designed for borrowers with no verifiable income due to self employment or tipped income. The loan can also be used for salaried employees that may have a co-borrower contributing non-reported income that must be used to qualify. In either case, the lender requests that the borrower state their income in order to qualify. The income must be reasonable for the job listed.
Home Equity:
Either done as a line of credit or as a fixed rate loan, these loans can be used for a variety of purposes, including cash back or home improvement. Borrowers may take up to 100% of their home’s equity.
Construction/Permanent:
Borrowers are able to have homes build using one loan and one set of closing costs. The loan is taken our prior to construction and converts automatically to a permanent loan when the house is completed. Rates can be locked prior to construction for the entire term of the loan or the borrower may elect to float the rate during construction. Existing land may be used for the down payment or new land can be purchased using the loan proceeds.
FHA Loans:
Federally insured loans for borrowers who meet specific income and credit requirements. There are maximum loan amounts for each county. Credit scores are not used but the overall credit profile is reviewed. FHA loans are used for purchase or refinance, or can be used for minor renovation work on a current or future home.
Sub-prime:
For borrowers with blemished credit, sub-prime loan offer the opportunity to purchase or refinance home, sometimes up to 100%. Credit scores can be as low as 500 for some products. We are able to finance borrowers that are recently discharged from a bankruptcy, sometimes as soon as 1 day from the discharge.
Niche Products
There are several programs for specific loan scenarios. Some of the options are listed below. Please contact us if you have an unusual loan request.
Option ARMs - Designed to allow borrowers to choose a payment every month, ranging from deferred interest to a 15 year fixed. These loans can start with extremely low interest rates, sometimes only 1.00%.
Manufactured Homes - We are able to finance manufactured homes for purchase or refinance, or as a construction loan for a new unit. For purchases or refinances, the home must already have a permanent foundation. Please contact us with specific needs.
Combination Loans - Set up as 80/20, 80/10/10, or other varieties, these are used as alternatives to paying mortgage insurance. The programs results in the borrowers paying on two mortgages, but not having to pay mortgage insurance.
No MI Loans - Designed as an alternative to both mortgage insurance and combo loans, these programs for borrowers putting less than 20% down or have less than 20% equity. These are only one loan payment and no mortgage insurance. They can be available up to 100% financing on purchases.
Blanket Loans - This loan will encompass two or more properties into one loan. It is used mainly to purchase a new property without having to make a cash down payment. The properties must be refinanced within a specific time period to remove the blanket loan. Borrowers need excellent credit and good equity positions to qualify.
No Cost Mortgages - Loans in which the mortgage company or bank pays for all closing costs for the borrower, including title work and appraisal fees.
Reverse Mortgages - A reverse mortgage allows senior borrowers to convert part of their equity to an income stream with having to sell the home. The loan and accrued interest is due when the last borrower leaves the home.
No Doc - This unique program is designed for borrowers who are between jobs, newly self employed, or who receive income or assets from unverifiable sources. They are qualified strictly on their credit profile. In many of these cases, no down payment is required.
