Residential Mortgages

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SOME AVAILABLE LOAN TYPES:

There are several mortgage products available in today market. We can help you find out which one is right for you. Here are the most common options.

Fixed Rate Mortgages (FRM’s)

• Interest rates stay constant for the life of the loan.
• Offered in 10, 15, 20, or 30 year terms.
• Payments are made up of principal and interest (P & I) portions and escrow portions. The P & I portion would not change for the life of the loan. Escrow amounts would pay for things like home owners insurance and property taxes. Escrow amounts may differ from time according to the cost of these items.
• If your loan requires that you carry Personal Mortgage Insurance (PMI), these payments would be added to your monthly payment amount until this mortgage would no longer be necessary. This is normally when you gain 20% equity in the home.
• Fixed rate mortgages usually have low down payment requirements.

Adjustable Rate Mortgages (ARM’s)

• Also called variable-rate loans.
• Starts out with a lower interest rate, and changes according to market fluctuations. How often it changes depends on the terms of the loan. The most common adjustment term is once every year.
• ARM’s have restrictions, or caps, on the number of percentage points it can go up each year. It also has caps on how much it can go up for the life of the loan. This happens according to the terms of the loan you choose.
• A convertible ARM allows you to have the lower interest rates for the beginning of the loan, but the option to convert to a fixed rate loan when you choose.

Interest Only Mortgages

• An option that can be attached to any type of loan.
• You pay only the interest on your borrowed amount for the beginning terms of the loan. This is generally between 1 to 10 years in length.
• At the end of your interest - only period you begin making payments based on the interest rate of the type of mortgage you choose - a FRM or an ARM. You have conventional principal and interest payments, plus any escrow amounts that are due.
• You do not save any money on your principal when choosing this type of loan. It only delays you paying your principal for a preset length of time.

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