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Loan
Programs
 Below is a brief explanation of some of the most commonly used loan
programs. Please contact us for further details.
Fixed Rate Loan
A loan, which has an interest rate that remains constant throughout
the life of the loan, usually available for 30 or 15 years, even
for 20 or 40 years, depending on the lender. Your payment is the
same every month.
Buy Down
A fixed rate loan where the interest rate is reduced for the first
2 or 3 years, the rate remains fixed for the remaining years of
the loan.
Balloon Loan
A fixed rate loan that is authorized over a 30-year period but becomes
due and payable at the end of a certain term (5 or 7 years). May
be extendable or may roll over into another type of loan, particularly
if you still reside in the property, have no late payments in the
past 12 months, and have not placed any second mortgages or liens
on the property.
Adjustable Rate Mortgage (ARM)
A loan that has an interest rate that increases or decreases at specified
times during the life of the loan, either monthly, twice a year,
or once a year. Many adjustable rates are fixed for 3, 5, 7 or
10 years, then become adjustable with the rate changing once or
twice a year. On all adjustable, the rate changes according to
an underlying financial index. The most common indexes are Libor
(London Inter-Bank Offered Rate), 1 Year T-Bill, Constant Maturity
Treasury, 6 month CD, and 11th District Cost of Funds. The margin,
which is added to the index to determine the new rate, remains
stable throughout the life of the loan. Adjustable loans have lifetime
caps, so you know ahead of time how high the interest rate could
potentially rise.
"Easy Qualifier" Loans
In cases where you have at least 10% to invest as a down payment
on a property, some lenders waive their income verification requirements.
In addition to the down payment, these loans require that you have
good credit and at least 6 months of housing payments in the bank
when the loan closes. Sometimes (especially with fixed rates) these
loans carry a slightly higher interest rates than loans where income
is verified.
Prepayment Penalty
Some lenders may offer lower interest rate on particular loan products
if you agree to accept a prepayment penalty. In general, this penalty
applies during the first three years of your loan should you pay
off more than 20% of the loan balance in any given twelve months
period. The penalty is typically 2% of the loan amount at the time
of pay off. The penalty applies whether you are simply making extra
payments, or whether you sell or refinance your home during the
first three years.
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