Mortgage Financing

There are several factors that lenders consider when you apply for a mortgage loan including your income, expenses, assets, and credit rating. After your loan officer collects and analyzes this information, he can inform you how much of a loan you qualify for and at which rate.

Interested in applying for a loan or speaking with a mortgage consultant? CLICK HERE

The lending industry is always changing and the types of loan products that are offered change over time. The basic types of loans available include:

Fixed-Rate Mortgages – The interest rate stays the same for the entire term of the loan making your payments stable and predictable.

Adjustable-Rate Mortgages (ARM) – The interest rate is linked to a financial index with a fixed premium. Because financial indexes vary, so will your payment. Many ARM products offer an initial “teaser” rate for a period of several years which could be fairly low. Using this type of product could be risky, but is useful in certain circumstances.

Interest Only Loans – Only the interest on the principle of the loan is paid for a set term. At the end of the term, the borrower will have to either repay the loan or convert the loan to a repayment loan.

FHA/VA Loans – The Federal Housing Administration (FHA) and the Department of Veterans Affairs (VA) insures loans that meet certain criteria offered by your lender. This is to promote homeownership for people with low or moderate income and limited savings. These loans require little (FHA) or no (VA) down payment which will help the borrower get into a home, but they typically have a higher interest rate than a conventional loan.

If you offer less than 20% for the down payment on your new home, you may be required to pay for private mortgage insurance (PMI) as part of your monthly mortgage payment. PMI is an insurance policy written by private companies insuring lenders against loss resulting from defaults on mortgages.

Any loan that is not an FHA or VA loan is considered a “conventional” loan because it follows the terms and conditions set by Fannie Mae and Freddie Mac. If a loan does not meet Fannie Mae or Freddie Mac’s qualifications, it is considered a non-conventional loan and will come with a higher interest rate, such as a jumbo loan.

Interested in applying for a loan or speaking with a mortgage consultant? CLICK HERE