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Fixed Rate Mortgage

With a fixed rate mortgage, you know exactly what your principal and interest payment will be each month for the life of your loan. It won’t change because your interest rate doesn’t change. Your taxes and insurance component of your payment towards escrow can change (and probably will) if your taxes and insurance change. Unfortunately, there’s no way to lock those in.  If interest rates go up, you’re protected with a fixed rate mortgage.  But, you won’t benefit if rates go down. You can always take advantage of falling rates by refinancing.

Fixed rate mortgages might be right for you if:

• Want the security of a fixed principal and interest payment.
• Think that interest rates will go up.
• Are on a fixed or limited budget.  

Fixed versus Adjustable mortgage? Whats the difference and which should you get? 

Adjustable Rate Mortgage (ARM)

Compared to fixed rate mortgages, Adjustable Rate Mortgages (ARMs) offer a lower interest rate to start, so your monthly payments are generally lower. But, the interest rate moves up and down with the market based on an "index". Some of the more common indices include U. S. Treasury Bills, Cost of Funds Index (COFI) and the London Interbank Offered Rate (LIBOR).  Most ARMs have an initial fixed rate period where the interest rate doesn’t change followed by the rest of the loan’s lifetime period where the rate is adjusted at predetermined intervals. Many ARMs have caps that limit how much your interest rate can change per period as well as for the life of the loan. 

Also be aware that there are some very low rates ARMs that start out with "discounted" rates. These discounted rates are below the market rate and will definitely go up at the first adjustment period.  Option ARM information and articles here. 

Adjustable rate mortgages might be right for you if:

· You want more property than you can qualify for now with a fixed rate.

· You are confident your income will increase or rates will not go up much.

· You plan on selling or refinancing within seven years of buying your home.  

Fixed versus Adjustable mortgage? Whats the difference and which should you get?

Jumbo Mortgages

Jumbo Mortgages or nonconforming loans exceed the loan limits set by the two publicly chartered corporations (Fannie Mae and Freddie Mac) that buy mortgage loans from lenders and mortgage bankers. The 2006 single family loan limit is $417,800. If you need to borrow more than that amount, you need a jumbo mortgage. These jumbo mortgages typically have a higher interest rate than conforming mortgages.  And with prices of housing in california the jumbo-loan mortgage market has increased, depending on the price of your house and 80/20 or first/second combo loan will give you an amount on your first mortgage one that is less than the maximum conforming-loan limit.

FHA

The Federal Housing Administration (FHA) provides a loan guarantee program instead of the standard private mortgage insurance (PMI) so qualified borrowers can get a mortgage loan with a down payment as low as 3%. The FHA doesn’t make the loan but rather they guarantee the loan minimizing the lender’s financial risk. FHA loans usually offer fairly liberal qualifying criteria compared to Fannie Mae and Freddie Mac and involve small down payments. The offer both fixed and adjustable loans.   Reverse mortgage loans are also available through FHA, allowing persons over 62 years old to eliminate their mortgage loan payments and receive monthly cash flow and stay in the house virtually free.

Construction  

Construction loans are used to finance the building of a new home rather than purchase an existing home. They are usually variable-rate loans that have interest only payments during the construction phase. Draws are scheduled based on the stages of construction to pay the builders. 

Many construction loans are construction-to-permanent which means that when construction is complete, the loan is converted to a normal mortgage. This has the advantage of a single loan with one closing.

Reverse mortgages (also called home equity conversion loans) enable elderly homeowners to tap into their equity without selling their home. The lender pays you money based on the equity you've accrued in your home; you receive a lump sum, a monthly payment or a line of credit. Repayment is not necessary until the borrower sells the property, moves into a retirement community or passes away. When you sell your home or no longer use it as your primary residence, you or your estate must repay the cash you received from the reverse mortgage plus interest and other finance charges to the lender.

Most reverse mortgages require you be at least 62 years of age, have a low or zero balance owed against your home and maintain the property as your principal residence. 

Reverse mortgages are ideal for homeowners who are retired or no longer working and need to supplement their income. Interest rates can be fixed or adjustable and the money is nontaxable and does not interfere with Social Security or Medicare benefits. Your lender cannot take property away if you outlive your loan nor can you be forced to sell your home to pay off your loan even if the loan balance grows to exceed property value.

To qualify for second mortgage, your credit must be in good standing and you must be able to document your income. An appraisal will be required on your home to determine the home's market value.

 

Interest Only Mortgage

An interest-only mortgage is one that allows borrowers to pay only the interest for some specified period. The required monthly mortgage payment includes no repayment of principal, though borrowers can make such payments if they like. Read the full report here.

 

Convertible ARM - 3/1, 5/1

These are loans which are fixed for the years in front of the / and then they will turn into an adjustable loan after the initial fixed period. Most of the time they will fully amortize ( or pay off) in 30 years time if you continue making the payments, the payment will then fluctuate depending on your adjustment period, adjustment cap and lifetime cap.  Most of the time these loans are good for the person who might have to move in a certain period of time, military, mission, executive, workers on long term assignment. These enables these people to have fixed payments for a certain period.  With almost all loans we can add an interest only option or extend the period to 40 years instead of 30 and add a prepayment penalty - all of which will lower your total mortgaege payments and allow you to save your money or use it for something else, and you always have the ability to pay more than the minimum payment at any time. Read the 5/1 arm description.  Some people consider all the interest only and convertible mortgages exotic.

  

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Which loan is right for me?  Loan Matrix

Years you plan to stay in the house Recommended program 1-3 3/1 ARM, 1 year ARM or 6 month ARM 3-5 5/1 ARM 5-7 7/1 ARM 7-10 10/1 ARM, 30 year fixed or 15 year fixed 10+ 30 year fixed or 15 year fixed

Loan Programs Advantages Disadvantages Fixed Rate Mortgages 30 year fixed 15 year fixed Monthly payments are fixed over the life of the loan Interest rate does not change Protected if rates go up Can refinance if rates go down Higher interest rate Higher mortgage payments Rate does not drop if interest rates improve Adjustable Rate Mortgages 10/1 ARM 7/1 ARM 3/1 ARM 1 year ARM 6 month ARM 1 month ARM Lower initial monthly payment Lower payment over a shorter period of time Rates and payments may go down if rates improve May qualify for higher loan amounts More risk Payments may change over time Potential for high payments if rates go up Balloon Mortgages 7 year 5 year Lower initial monthly payment Lower payment over a shorter period of time Many balloon mortgages offer the option to convert to a new loan after the initial term. Risk of rates being higher at the end of the initial fixed period Risk of foreclosure if you cannot make balloon payment or if you cannot refinance or if you cannot exercise the conversion option First Time Buyer Programs   Lower down payment Easier to qualify Sometimes you may get lower rate May be subject to income and property value limitations Some programs which have government subsidies may have a recapture tax if you sell the house too early. Stated Income Programs   Don't need to verify income Faster approval Higher rates Higher down payment No point, No fee Programs   No closing costs Less money required to close Higher rates Higher payments Imperfect Credit Programs   Potential for reestablishing credit if you pay your mortgage on time. When used for debt consolidation, you may be able to reduce your monthly debt payment Higher rates Terms may not be as favorable Harder to get long term fixed loans Loans may have prepayment penalties Home Equity Line of Credit   You only borrow what you need Pay interest only on what you borrow Flexible access to funds Interest may be tax deductible Rates can change. The maximum interest rate is normally high. Payments can change Harder to refinance your first mortgage Home Equity Fixed Loan   Fixed payments Interest may be tax deductible Higher interest rates than on 1st mortgages Harder to refinance your first mortgage

Besides our standard loan programs, we also have a large number of unique programs to serve your needs: Purchase a house with 0 down Piggyback loans 80-10-10 or 80-15-5. No PMI payments even with 5% or 10% down. Debt consolidation programs Home Improvement loans Qualify even if you may have been turned down before!

 We also offer these loan programs customized to your needs:

30 Year Conforming Fixed
5 Year Conforming Fixed Balloon
7 Year Conforming Fixed Balloon
10 Year Conforming Fixed
30 Year Conforming Fixed - 80/10/10
30 Year Conforming Fixed with 2/1 Buydown
20 Year Conforming Fixed
7 Year Conforming Fixed Balloon with 2/1 Buydown
25 Year Conforming Fixed
20 Year Conforming Fixed - 80/10/10
30 Year Conforming Fixed - up to 80% Cashout
15 Year Conforming Fixed - up to 80% Cashout
Flex 30 Year Conforming Fixed - 3% Down Payment
COOL 100% First
15 Year Conforming Fixed
15 Year Conforming Fixed - 80/10/10
15 Year Jumbo Fixed
30 Year Conforming Fixed Relo
5 Year Conforming Fixed Balloon Relo
7 Year Conforming Fixed Balloon Relo
30 Year Conforming Fixed - 80/10/10 Relo
30 Year Conforming Fixed Relo with 2/1 Buydown
30 Year Jumbo Fixed - Relo
7 Year Conforming Fixed Balloon Relo with 2/1 Buydown
20 Year Conforming Fixed Relo
25 Year Conforming Fixed Relo
20 Year Jumbo Fixed Relo
25 Year Jumbo Fixed Relo
15 Year Conforming Fixed Relo
15 Year Jumbo Fixed Relo
30 Year Jumbo Fixed 30 Year Jumbo Fixed with 2/1 Buydown
20 Year Jumbo Fixed
25 Year Jumbo Fixed
25 Year Jumbo Fixed
30 Year Jumbo ARM - 6 Month LIBOR - 2.500% margin
30 Year Conforming ARM - 5/1
30 Year Conforming ARM - 7/1
30 Year Conforming ARM - 10/1
30 Year Jumbo ARM - 6 Month LIBOR - 2.875% margin
30 Year Conforming ARM - 6 Month LIBOR - 2.875% margin
30 Year Conforming ARM - 6 month LIBOR - 2.500% margin
30 Year Jumbo ARM - 10/1
30 Year Jumbo ARM - 5/1
30 Year Jumbo ARM - 7/1
30 Year Conforming ARM - 3/1
30 Year Jumbo ARM - 3/1 30 Year Conforming ARM 1 Year convertible
30 Year Conforming ARM 1 Year non-convertible
30 Year Jumbo - COFI - 1 Month ARM / 1 Year adjustable
FHA 30 Year Fixed with 2/1 Buydown
FHA 20 Year Fixed
FHA 25 Year Fixed
FHA 30 Year ARM with 1 Year adjustments
FHA 30 Year Fixed
FHA 15 Year Fixed
FHA 15 Year Fixed
VA 20 Year Fixed
VA 25 Year Fixed
VA 30 Year Fixed
VA 15 Year Fixed

To find out more on any loans listed here or just talk about your options,

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