| Fixed
Rate Mortgages |
15 year fixed
30 year fixed | -
Fixed monthly payment and rate protect against interest and monthly payment increases
|
- Higher interest rate compared to ARM introductory rates
- Higher
rate compared to two and three year fixed rate loans
- Fifteen and thirty
year loans should generally be obtained if you plan not to move or refinance in
the foreseeable future. If you're trying to improve your credit in anticipation
of refinancing for a lower-rate loan, consider avoiding these loans.
|
| Government
Mortgages |
FHA 30 year fixed
FHA 15 year fixed
FHA 1 year ARM
FHA 3/1 ARM
FHA 5/1 ARM
| - Only 3% down
payment required
- The 3% down payment can be a gift from blood relative,
nonprofit agency, or municipality
- No minimum credit score
- Lower
mortgage insurance payments compared to conventional
- Seller can pay up
to 6% of the sales price towards buyer's closing costs and/or prepaids
|
- Regardless of down payment amount, 1.5% of base loan amount will be
charged as "Upfront Mortgage Insurance Premium", usually rolled back into the
loan.
- Certain condos are not eligible
- More restrictive debt
to income ratios than conventional loans
- FHA's has loan limits which
vary by county. Contract Trinity Home Loans for more details.
|
|
VA 30 year fixed
VA 15 year fixed
VA
3/1 ARM
VA 5/1 ARM | - No down
payment is required in most cases.
- No minimum credit score
- No
monthly mortgage insurance payments
- VA loans are assumable, even to non-Veterans
(subject to VA approval)
- Seller can pay up to 6% of the sales price towards
buyer's closing costs and/or prepaids
|
- A basic funding fee of 2% must be paid to VA by all but certain exempt
veterans. A down payment of 5% or more will reduce the fee to 1.5% and a 10% downpayment
will reduce it to 1.20%. (Eligible Reserve/National Guard individuals will pay
a .75% higher funding fee)
- ONLY Veterans who served on active duty and
were discharged under conditions other than dishonorable, during World War II
and later periods are eligible for VA loans.
- Maximum loan amount is $359,650
-
More restrictive debt to income ratios than conventional loans
- The Veteran
must occupy the property as their primary home when obtaining the loan
|
| Adjustable
Rate Mortgages |
10/1 ARM
7/1 ARM
3/1 ARM
1 year ARM
6 month ARM
2/28 ARM
3/27 ARM
1 month ARM
| - Lower
initial monthly payment
- Lower payment over a shorter period of time
- Rates
and payments may go down if rates improve.
- May qualify for higher loan
amounts
| - Payments may
change over time
- Potential for high payments if rates go up
- Some
loans have "negative amortization" provisions that may cause increases in your
loan balance
|
 |
| Balloon Mortgages
|
15 year
7 year
5 year | - Lower
initial monthly payment
- Lower payment over a shorter period of time
- Many
balloon mortgages offer the option to convert to a new loan after the initial
term
| - Risk of rates being
higher at the end of the initial fixed period
- Risk of foreclosure if you
cannot make the balloon payment, refinance or exercise the conversion option
|
|
| Niche Programs |
| All lenders offer
some kind of 'Niche' programs targeting a specific market. |
- 'niche' programs generally have easier guidelines if
the borrower qualifies for a specific program.
Some example programs include:
103%-107% financing
Teachers
Fire Fighters
Police Officers, etc.
Call us to see if you qualify for a niche program |
- 'niche' programs will have higher interest rates.
|
|
| Home
Equity/Home Improvement Fixed Loans |
| | - Fixed payments
- Receive
one lump sum at closing
- Interest may be tax deductible
|
- Higher interest rates compared to 1st mortgages
- Harder
to refinance your first mortgage
|
|
| LOANS TO HELP REESTABLISH CREDIT |
| Loan Programs | Advantages | Disadvantages |
|
| Adjustable
Rate Mortgage (ARM) |
6 month ARM
12 month ARM
2/28 ARM
3/27 ARM
|
- Six and twelve month ARMs can significantly lower a mortgage
payment for six or twelve months. That can be enough time to catch up on other
debt payments and improve your credit rating.
- Some credit problems can
take 2-3 years to improve a credit score making the 2/28 and 3/27 ARMS a better
choice
| - Credit repair
ARMs can become expensive after the initial FIXED introductory period. The goal
is to fix your credit and refinance to obtain a better loan.
|
|
2 year fixed
3 year fixed | - Two and three year
fixed rate mortgages provide the security of a fixed loan payment and relatively
low, fixed interest rate for the first
two or three years. For most people
trying to improve their credit,two to three years is plenty of time. After two
or three years, these loans
convert to ARM loans. |
- Two and three year fixed rate mortgages convert to ARM loans at the end
of the fixed rate period. Rates on ARMs can increase. Chances
are, you'll
want to improve your credit and obtain a different loan before the two or three
years are up. |
|
