How do you expect your finances to change?
How long do you intend to keep the subject property?
How comfortable would you be if your mortgage payment changed?
How would you rate your overall credit?
Are you planning on making home improvements, making large purchases, or sending your children to college? Or even planning a leisurely vacation?
For example, a 15-year fixed rate mortgage can save you thousands of dollars in interest payments as opposed to a 30-year fixed rate. However, your monthly payments will be significantly higher than the 30-year mortgage. An adjustable rate mortgage may get you started with a lower monthly payment than a fixed rate mortgage, but your payments could get higher when the interest rate adjusts.
The Programs
As a wholesale lender, I provide highly competitive interest rates from well over 100 lending sources. Most of which are not even available to the public. The types of loan programs listed below merely scratch the surface as far as what is available and are listed for informative purpose only.
Fixed-Rate Loans
With Fixed-Rate Loans, the interest rate and mortgage payments remain fixed for the period of the loan and are structured to pay off the balance at the end of the loan term. They are available for 30, 25, 20, 15 and 10 years with 30 and 15 being most popular. Generally, the shorter the term of a loan, the lower the interest rate. As a result of a shorter loan term, you pay more towards the principle than you would towards interest over a longer fixed loan term. The only difference is that your monthly mortgage payments are substantially greater because the pay-off is being structured over a shorter period of time.
Now is a perfect time to consider a Fixed-Rate Home Loan because you are practically guaranteed a good rate in today's market as opposed to years past. Although your initial payments may be higher than with an shorter-term loan, you will receive added security of a fixed monthly payment for the life of the loan, regardless of rising interest rates. A Fixed-Rate Mortgage is ideal for anyone who plans to keep their home for several years or likes the piece of mind associated with being able to budget more effectively over a longer term.
Home Equity Loan
A Home Equity Loan allows you to leverage the equity in the land, which is the difference between the home's fair market value and how much money you have invested into owning the home. A Home Equity Loan can be done with a series of different loan programs and can be acquired as a lump sum or used as a revolving, secured equity line of credit at your disposal. If you have equity in your home, a Home Equity Loan is a very effective way to get the things you need at a good price. Perhaps you want to purchase a new car, make repairs or upgrade your property. Maybe you want to start your own business. You can with Home Equity Loans, plus more. It is your equity so you can do what ever you want with it.
Interest-Only Loan
Interest-Only Loans are highly misunderstood and sometimes avoided because of the borrower’s fear. The idea is that you initially make interest payments as opposed to both interest and principal payments as you would do with a conventional loan. The main advantage is that your monthly payments are substantially lower than they would be with a conventional loan for a fixed number of years while still giving you the freedom to pay more towards the principle if need be.
This fixed period varies. Sometimes, it is anywhere from three to seven years, after which you begin paying interest and principal over the remainder of the loan. It is at that point the rate turns into an ARM (Adjustable-Rate Mortgage) or remains fixed and can increase in overall monthly payments due to the added principle factor.
Interest-Only programs are great for self-employed borrowers whose monthly income fluctuates, first-time home buyers that cannot compete with rising property values but want equity in real estate, and investors that want to tap into the housing market.
Debt Consolidation Loan
A Debt Consolidation Loan allows you to pay off all or a portion of existing debt (including the existing mortgage loan) from loan proceeds. Debt Consolidation is one of the most effective tools for debt management because it consolidates several debts into one. Debt Consolidation Loans can reduce your monthly bills by up to 70% and can do away with all your existing credit card debt, loans and other debts. In replacement, you will have a single lower monthly payment instead of numerous higher payments that carry the burden of higher, combined interest. You deal with one bill every month so there is no more trying to keep track of whom you can pay this month or having to deal with calls from harassing creditors. It will give you piece of mind and the freedom in knowing you are on the right track to a debt-free life.
Home Equity Lines of Credit
A Home Equity Line of Credit (HELOC) is a secured line of credit or type of special checking account that is tied to the equity in your home. You only incur interest costs on the money you take out of the account which is usually determined by the current prime rate. It is ideal for borrowers that plan to make future or episodic investments without taking the risk of possible higher interest rates at a later date. A major advantage of the Home Equity Line of Credit is that your interest costs are tax deductible.
Subprime
Are there home loan programs available for borrowers with less than perfect credit? Absolutely! As early as a decade ago, it was very difficult for anyone with bad credit to obtain financing. Subprime Loans are geared toward consumers with less than perfect or non-existent credit histories. They were established on the idea that willing consumers had the ability and desire to repay the debt of the loan.
How do you know if you are "credit challenged?" Request a copy of your credit report from me and you will receive your credit score with a detailed explanation.
Adjustable-Rate Mortgages (ARMs)
Adjustable-Rate Mortgages are fixed-rate, short-term loans that adjust at regular intervals in accordance with current interest rate index conditions once the fixed period has expired. A 3/1 ARM, for example, has a fixed rate for three years and then adjusts every year for the next 27 years, as ARMs typically run on a 30-year term. Most are adjusted every year or every three years within prescribed limits (Interest Caps limit the amount the interest rate can be increased).
If you know you will be in a home for an extended period of time, a Fixed-Rate Home Loan might work better for you than say, a 5/1 ARM, where a rate is fixed for five years and then it adjusts every year after that. Early in the loan, interest rates on an ARM are usually far below conventional Fixed-Rate Mortgages, so Adjustable-Rate Mortgages are a great option for short-time dwellers or buyers on a tight budget.
Government Loans (FHA, VA)
Federal Housing Administration (FHA) guarantees loans that require lower down payments than conventional mortgages. The FHA allows for borrowers with less than perfect credit to receive the same interest rate as a borrower with good credit. While interest rates are similar, credit guidelines are different along with mortgage limits that are determined by area.
The Department of Veteran Affairs guarantees loans with attractive interest rates for eligible Veterans. This guaranty allows veterans, those currently on active duty, reservists and their spouses to obtain home loans with favorable loan terms, usually without a down payment.
The VA determines your eligibility and, if qualified, issues the certificate of eligibility (VA Form 26-1880). For more information on eligibility requirements and procedures, please visit The Department of Veteran Affairs home loan resources page.