SIMPLE SOLUTIONS FOR YOUR MORTGAGE NEEDS!
ASSURED MORTGAGE, L.L.C. >
Most people can't accumulate all the cash needed to buy a house. So, what
most people do is borrow a large part of the purchase price. This
instrument of borrowing is called mortgage financing. When obtaining
a home mortgage you must in return pledge
your house, the land or lot, and the down payment as security. Calculate
what your mortgage would be online now!
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A mortgage is simply a very large loan that a home
buyer uses to purchase a home. There are different parts of a mortgage.
The following is one of those instruments: Mortgage Note – sometimes
called a promissory note, it is the document that contains a promise
to repay the loan. It indicates the specific terms and conditions
of your loan, and how it will be repaid.
The actual mortgage
is a separate document that you sign at closing. It pledges your home
as security for the loan. In some states, buyers sign a deed of trust
rather than a mortgage – either document serves the same function.
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Loan Programs
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Years you plan to stay in the house
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1-3
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3/1 ARM, 1 year ARM or 6 month ARM |
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3-5
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5/1 ARM
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5-7
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7/1 ARM
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7-10
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10/1 ARM, 30 year fixed or 15 year fixed |
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10+
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30 year fixed or 15 year fixed |
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There are many loan products designed to meet the borrowers individual criteria.
Most of these products fall under a few basic loan types.
- 15-Year and 30-Year Fixed Rate
Payment and rate stay the same from start to finish
- 5 and 7 Year Balloons
Lower start rate. Some of the balloon programs may be converted to an adjustable rate or a fixed rate after the 5 or 7 years, with very low fee and attractive rate
- Adjustable Rate Mortgage (ARM)
Lowest start rate Adjusts either every 6 months or every 12 months depending on program and grade and is
based on the economy 6% ceiling for prime and 7% ceiling for sub-prime.
- 5/1 and 7/1 Fixed Rate>
Rate is fixed for the first 5 or 7 years, then shifts to an adjustable rate mortgage (ARM).
- 2/28 and 3/27 ARM
An ARM program that is fixed for the first 2 or 3 years, then shifts into a 6 month adjustable rate mortgage. It is a sub-prime program giving you a rate lower than the sub-prime 30-year fixed, and if you have had credit
problems, it allows a window of time for credit rebuilding and seasoning. You will then want to refinance this loan.
You may want to consider a balloon mortgage. Some balloon loans
allow you to convert to a longer term if you find the 5 or 7
years was not enough time. Conversions are easy and reasonable.
When you consider this loan, ask if the program is convertible.
To qualify for the house you want, an adjustable rate or a 7-year balloon may be the answer.
If you want a fixed predictable loan for a long time, the 15-year or 30-year
fixed is probably the best, especially when you have good credit.
Here are a few things to keep in mind when selecting a loan program.
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Advantages
Maximum interest deduction for taxes, sometimes easier to qualify, stable predictable payments, high loan to value, lower down payment, possible secondary financing if needed.
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Disadvantage
Pay more interest over the life of the loan, higher starting interest rate, Lower debt ratio (Larger Income to qualify) Higher monthly payment.
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Advantages
Lowest starting interest rates help qualify for higher loan amounts. If you plan to sell within 2-3 years. If you expect your income to increase
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Disadvantage
Periodic payment and rate increases, builds equity Slower payment increases may affect budget.
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Advantages
Lower starting rate than 30 year fixedgreat for refinancing from a higher rate use when you plan a move in 5-7 years Some are convertible to 30-yr fixed or a treasury ARM, low fees, good rates.
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Disadvantage
Loan Balance Due can Change Long Term Financial Planning If You Plan to Live There Over 7 Years.
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