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Mortgage Info |
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Select a link below to find out more about what each type of loan offers. |
Bruce Nangle |
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Fixed Rate Mortgage |
| A fixed rate mortgage has an interest rate and monthly payments that never change. These mortgages afford borrowers stability because they are unaffected by the ups and downs of fluctuating rates. There is no risk of a sudden rate increase making monthly payments unaffordable. Consequently, many people find that the consistent payment amounts aid them in managing their budgets. This is also a popular and practical option for people planning to stay in their homes for several years because they can end up saving money in the long run. Fixed rate mortgages can be more difficult to qualify for than other types of loans, however. And if interest rates decrease significantly, refinancing is required to capitalize and obtain lower payments. Shorter-term fixed rate mortgages offer significant interest savings over longer-term fixed rate mortgages, but have higher monthly paments. |
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Adjustable Rate Mortgage |
| Adjustable Rate Mortgages (ARMs) feature an interest rate that adjusts up or down at specified intervals of the mortgage term. The initial interest rates for ARMs are lower than those of fixed rate mortgages. However, after that preliminary low-rate period ends, the rate adjusts periodically - usually upwards. This makes ARMs a viable choice for borrowers who do not plan to stay in their home for an extended period of time. Others choosing an ARM run a risk of suddenly being faced with unaffordable monthly payment of three, five, and seven years, with rates adjusting annually thereafter, are common. These are generally referred to as 3/1, 5/1, and 7/1. |
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Conventional Mortgage |
| Loans that are not insured by the federal government and for amounts under limits established by Fannie Mae and Freddie Mac (government regulated private corporations) are considered conventional loans. Fannie Mae and Freddie Mac administer these loans. Currently, the conventional loan limit for single families is $417,000 in the continental United States. |
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Jumbo Loan |
| Jumbo loan amounts exceed the conventional loan amount limit. These mortgages are funded by the private investment market. |
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FHA Loan |
| FHA loans are insured, but not funded, by the Federal Housing Authority. Essentially designed for low- and middle-income borrowers and first-time borrowers, FHA loans tend to have more lenient qualifying criteria than conventional loans. |
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VA Loan |
| The Veterans Administration insures, but does not fund, loans for those with qualified military service. These loans offer more relaxed qualifying criteria and less stringent down-payment requirements than conventional loans. |
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No Documentation Loan |
| No Documentation loans provide a convenient means of financing for people who do not wish to state their employment or even state their assets. These mortgages typically have slightly higher interest rates and are granted by fewer lenders. |
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No Ratio Loans |
| No Ratio loans will not use the potential buyers income to qualify. Assets will be verified. These mortgages typically have slightly higher interest rates and are granted by fewer lenders. |
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Stated Income Loans |
| Stated Income Loans will require the potential buyer to state his income and verify his assets to qualify for the mortgage. The borrower’s income will not require verification. These mortgages typically have slightly higher interest rates and are granted by fewer lenders. |
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Negative Amortization Mortgage or pay option ARM |
| With this type of mortgage, the borrower has the option to make monthly payments that are less than the accruing interest on the loan. Consequently, if the borrower chooses to make the minimum monthly payment, the loan balance will increase by the amount of interest not paid on the loan. The upside is the borrower can choose to make the full loan payment, the minimum payment, or any amount in between. This type of loan can be practical for someone who does not have a regular, steady income. |
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