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Types of Loans

FHA

FHA or the Federal Housing Administration is a division of The Department of Housing and Urban Development (HUD) which insures residential mortgage loans.  Because FHA loans are government backed, these mortgages provide lower down payments and more lenient income and credit qualifying.

 

VA

VA loans are guaranteed by the Department of Veteran Affairs.  They are available to qualified Veterans (active duty and reservist) and those currently serving in the military.  VA loans allow for 100% financing. 

 

Conventional

The traditional residential mortgage that allow for loans up to 80% loan to value (LTV) without private mortgage insurance (PMI).  However, lower down payments are available with the additional cost of PMI.

 

USDA

Residential mortgage financing that is guaranteed by the United States Department of Agriculture.  These loans are 100% financing, but have geographic and income requirements. 

 

Reverse Mortgage

A reverse mortgage is a low-interest loan for senior homeowners who are 62 years old or older which uses a home's equity as collateral. This differs from traditional mortgages because there are no monthly principal and interest payments and it can provide the homeowner a monthly income similar to an annuity. The loan does not have to be repaid until the last surviving homeowner permanently moves out of the property or passes away. At that time, the estate has approximately 12 months to repay the balance of the reverse mortgage or sell the home to pay off the balance. All remaining equity is inherited by the estate. The estate is not liable if the home sells for less than the remaining balance of the reverse mortgage.

Thirty-Year Fixed Rate Mortgage
The traditional 30-year fixed-rate mortgage has a constant interest rate with monthly principal and interest payments that never change. This may be a good choice if you plan to stay in your home for seven years or longer. If you plan to move within seven years, then adjustable-rate loans are usually cheaper. When interest rates are low, fixed-rate loans are generally not that much more expensive than adjustable-rate mortgages and may be a better deal in the long run, because you can lock in the rate for the life of your loan.

Fiftten-Year Fixed Rate Mortgage
This loan is fully amortized over a 15-year period and features constant monthly principal and interest payments. It offers all the advantages of the 30-year loan, plus a lower interest rate—and you'll own your home twice as fast. The disadvantage is that, with a 15-year loan, you commit to a higher monthly payment. Many borrowers opt for a 30-year fixed-rate loan and voluntarily make larger payments that will pay off their loan in 15 years. This approach is often safer than committing to a higher monthly payment, since the difference in interest rates isn't that great.

Adjustable Rate Mortgage
When it comes to ARMs there's a basic rule to remember...the longer you ask the lender to fix the interest rate, the more expensive the loan.

Hybrid ARM (3/1 ARM, 5/1 ARM, 7/1 ARM and 10/1 ARM)
These increasingly popular Hybrid ARMS—also called 3/1, 5/1, 7/1or 10/1—can offer the best of both worlds: lower interest rates (like ARMs) and a fixed interest rate for a longer period of time than most adjustable rate loans. For example, a "5/1 loan" has a fixed monthly principal and interest payment for the first five years and then turns into a traditional adjustable-rate loan, based on then-current rates for the remaining 25 years. It's a good choice for people who expect to move (or refinance) before or shortly after the adjustment occurs.

Buy Down Mortgage
The reduction of monthly mortgage payments for a specified amount of time due to monies advanced up front to the lender by the seller, buyer or a third party.

Annual ARM
This loan's interest rate is recalculated once a year based on an index plus a fixed margin (see mortgage glossary for definitions of index and margin).

Monthly ARM
This loan's interest rate is recalculated every month. Compared to other options, the rate is usually lower on this ARM because the lender is only committing to a rate for a month at a time, which significantly reduces the lender's risk.

 

Bankers Home Mortgage, Inc
10175 Fortune Parkway, Unit 1004, Jacksonville, FL  32256
Office:  (904) 292-1212
Toll Free:  (877) 292-1212
Fax:  (904) 880-8668
fred@e-bhm.com
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