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Which Loan?
When considering the many loan programs that are available, you may find yourself overwhelmed. This articles describes the various programs available and helps you decide which program is the correct one for you based on your specific situation and the current market conditions.30-Year Fixed Rate
This is the most popular conventional loan program. Your monthly payment is calculated based on the interest rate and never changes. This is the most conservative loan because there is no risk that a changing market condition will affect your monthly income.
20-Year Fixed Rate
Like the 30-Year loan, this program guarantees that your payment never changes over the life of the loan. Your payments will be higher than a 30-Year loan, because your loan period is shorter
15-Year Fixed Mortgage
The most aggressive of the Fixed Rate Mortgage options, resulting in a much higher monthly payment.
1-Year Adjustable Rate
A 30-Year loan in which the rate (and monthly payment) changes every 12 months on the anniversary of your loan.
T-bills or Bonds plus your margin determine your annual rate. This loan helps you qualify for the highest amount of loan possible. There is always a 1% cap per increase, and usually a 6% lifetime cap on this loan.
Little risk involved.
5/25 Balloon
Payments are calculated as if for a 30 year loan, but actually you are expected to pay this loan off in full after the five year period. Excellent loans for those who will sell there house or refinance within 5 years. Other balloon mortgages are 7/23 Balloon. Some balloon programs offer the borrower a Conditional Right to Reset, which effectively provides for an extension beyond the initial fixed period.
5/25 Two Step Loan
7/23 Two Step Loan
This 30-year mortgage offer an initial 5 or 7 year fixed period, then the rate will adjust once within the remaining period of the loan.
Lots of information, lots of questions. Don't be afraid to ask a lot of questions, it could potentially save you thousands of dollars in mortgage payments.
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