A 30 year fixed
mortgage loan is a type of mortgage loan that is repaid by the
borrower making 360 equal monthly payments over a period of 30 years.
Since the borrower's payments are 'fixed', the borrower can expect to
make the same monthly payment for the entire term of the loan. A 30
year mortgage loan is the most widely accepted program used to finance
a residential purchase, and is available for conventional, jumbo, FHA
and VA loans.
15 Year Fixed Rate
Program
A 15 year fixed
mortgage loan is a type of mortgage loan that is repaid by the
borrower making 180 equal monthly payments over a period of 15 years.
Since the borrower's payments are 'fixed', the borrower can expect to
make the same monthly payment for the entire term of the loan. A 15
year mortgage loan is the most widely accepted program used to finance
a residential purchase, and is available for conventional, jumbo, FHA
and VA loans. Real estate in Coconut Grove, Coral Gables.
1, 3, 5, 7, 10 Year
Adjustable Rate Loan Programs
An Adjustable Rate
Mortgage (ARM) is a mortgage loan that is most widely known for its
low starting interest rate (when compared to the 30 & 15 year mortgage
loans). This 'low' introductory rate is used to calculate the mortgage
payment for a specified period of time. Once this introductory period
is over, the interest rate is adjusted periodically based on a pre
selected index. The most commonly used index is the yield on the
one-year Treasury Bill. The new interest rate is determined by adding
this index to a set margin (which is determined by the lender).
Although there are a variety of adjustable rate mortgage programs
available, the most common program is the One Year Adjustable Mortgage
(one Year ARM). The interest rate on the one year ARM is adjusted once
each Year, for 30 years. APR's on variable rate loans are subject to
increase but may decrease from year-to-year, the borrower should be
prepared to handle an increase in his/her monthly payment (should the
index rate increase).
Jumbo Loan Programs
A jumbo mortgage is a
mortgage loan which is larger than the limits set by Fannie Mae and
Freddie Mac ($252,700 as of 1/1/2000). Since these two agencies will
not purchase these types of loans, they usually carry a higher
interest rate (to enhance their value and marketability to
investors).
FHA Loan Programs
An FHA mortgage loan is
insured by the Federal Housing Administration (a division of the
Department of Housing and Urban Development (HUD)). Although mortgage
lenders provide the mortgage funds, the FHA sets underwriting
standards for approving applicants. In many cases, FHA underwriting
guidelines are more lenient than conventional (not government insured
or guaranteed) underwriting guidelines. This leniency makes it easier
for borrowers to qualify for a mortgage loan (low down payment
requirements and a higher monthly debt allowance). FHA limits the
types of loan programs it insures, but it will insure the more popular
30 year fixed, 15 year fixed and one year adjustable loan programs.
However, borrowers are limited to the amount that they can borrow
using an FHA-insured mortgage. Applicable loan limits differ by
county, so contact your local HUD office for specifics.
VA Loan Programs
(Dept. of Veterans Affairs)
A VA mortgage loan is a
mortgage loan that is guaranteed by the Department of Veterans Affairs
(DVA). One of the biggest advantages of using a VA loan is that the
borrower can finance the purchase of a property with no-money down.
However, VA loans are restricted to individuals qualified by military
service. The DVA will guarantee the more popular 30 year fixed, 15
year fixed loan programs. Homes for sale in Coconut Grove, Coral
Gables.
5/25, 7/23 Balloon
Programs
A balloon mortgage loan
is a type of mortgage loan that has a short term (typically 5 or 7
years), but the monthly payment is computed using a 30 year term. When
a borrower uses a balloon loan, he/she will make the monthly payment
for the scheduled loan term (5 or 7 years). When this loan term is
over, the borrower is required to pay off the remaining balance in one
lump-sum payment. If the borrower decides not to sell the property
after the loan term is over, the borrower has the option to refinance
the mortgage with a new one. A 7/23 balloon mortgage gives the
borrower the option to convert to a fixed rate program (for a nominal
fee) after the initial term (7 years) is over. If the conversion
feature is used, the interest rate for the remaining term of the loan
(23 years) will be adjusted once to reflect market conditions, then
remain fixed for the remainder of the loan term.
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