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Conventional 30-Year Fixed Rate Mortgage
The traditional 30-year fixed-rate mortgage has a constant interest rate and monthly 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. As a rule of thumb, it may be harder to qualify for fixed-rate loans than for adjustable rate loans. 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. Conventional 15-Year Fixed Rate Mortgage
This loan is fully amortized over a 15-year period and features constant monthly 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. FHA 30-Year Fixed Rate Mortgage
A mortgage that is insured by the Federal Housing Administration (FHA), also known as a government mortgage, offers different advantages than the conventional 30-year mortgage. With FHA insurance, you can purchase a home with a low down payment from 3 percent to 5 percent of the FHA appraised value or the purchase price, whichever is lower. Lower credit scores can be considered for qualification and for the underwriting processes. Non-traditional credit may be used if traditional credit history is not available to verify proof of good financial management. The FHA 30-year fixed-rate mortgage has a constant interest rate and monthly payments that never increase and may decrease after the "loan to value" on the property reaches 78% and/or you have occupied the home for a minimum of 5 years. REVERSE MORTGAGE
Did you know Social Security was never designed to be an individual's sole source of retirement income? Instead, it was meant to bridge the gap between people's income from pensions, savings and their monthly expenses. However, savings, reductions in pensions or no pensions at all have nearly two-thirds of all seniors relying on Social Security for at least 50% of their total monthly income. Annual cost-of-living adjustments, even with the 5.8% social security benefits that were just announced, make for a tough time keeping up with the spiraling costs of healthcare and housing. Reverse Mortgages to the rescue. A Reverse Mortgage may be the lifeline that today's seniors need to "bridge the income gap." A Reverse Mortgage is a government insured loan that allows homeowners 62 years and older to access the equity in their home with no monthly payments. Yes - senior citizens desiring to eliminate their mortgage payments and utilize the equity in their home to financially improve the quality of their life while still owning their home now have a solution. A reverse mortgage is a low-interest loan for senior homeowners that use the home's equity as collateral. The loan amount is a percentage of the home's value determined by the age of the youngest homeowner. 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 balance of the reverse mortgage. Hybrid ARM (3/1 ARM, 5/1 ARM, 7/1 ARM)
These increasingly popular ARMS—also called 3/1, 5/1 or 7/1—can offer the best of both worlds: lower interest rates (like ARMs) and a fixed payment for a longer period of time than most adjustable rate loans. For example, a "5/1 loan" has a fixed monthly payment and interest 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. Adjustable Rate Mortgages (ARM)
When it comes to ARMs there's a basic rule to remember...the longer you ask the lender to charge you a specific rate, the more expensive the loan. 2/1 Buy Down Mortgage
The 2/1 Buy-Down Mortgage allows the borrower to qualify at below market rates so they can borrow more. The initial starting interest rate increases by 1% at the end of the first year and adjusts again by another 1% at the end of the second year. It then remains at a fixed interest rate for the remainder of the loan term. Borrowers often refinance at the end of the second year to obtain the best long-term rates. However, keeping the loan in place even for three full years or more will keep their average interest rate in line with the original market conditions. Annual ARM
This loan has a rate that is recalculated once a year. Monthly ARM
With this loan, the 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, so his vulnerability is significantly reduced.
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