When figuring out the right loan, time and payment are the 2 main factors. Certain loans have lower initial payments for a fixed period, these are known as ARM loans (adjustable rate mortgage). Other loans have higher monthly payments but have the certainty of the payment never changing, these are FRM (fixed rate mortgage).
This loan has the certainty of the same payment for 360 months. The rate and payment will never change for the life of the loan. This loan has a lower payment and higher rate than a 15 year fixed. There is more interest paid over time than a 15 year fixed.
This loan has the certainty of the same payment for 180 months. The rate and payment will never change for the life of the loan. This loan has a higher payment and a lower rate than a 30 year fixed. There is less interest paid over time than a 30 year fixed.
3, 5, 7 and 10-Year ARMs:
These loans are typically amortized over 30 and 40 years and are fixed with the same rate and payment for their respective numeric periods. After the initial fixed periods, the loans typically adjust yearly (can be set to also adjust semi-annually) on the anniversary date of the loan. At that point the interest rate is determined by a Margin Value (+) Index Rate to set the rate and payment for the subsequent 1 year period until the next anniversary of the loan.
Interest Only ARM Loan:
Almost exactly like the ARM loans described above, but the choice to pay only the interest for the respective 3,5,7 and 10 year initial fixed periods. They are also treated the same after their initial fixed period.
Require smaller down payments and lower credit requirements. While adhering to the loan limits set by the FHA (Federal Housing Administration) FHA loans can require as little as 3.5% down payment and will allow for a lower credit score.
Available to those with the benefits from serving our country made possible by the US Department of Veterans Affairs (VA). VA Loans are available to current or ex military personnel and surviving spouses. Depending on an individuals benefit, VA loans are with available with almost no money down on higher loan amount limits.
Reverse Mortgage Loan:
Available to those 62 years of age or older. Client stops paying their monthly payment and is still responsible for their property tax and homeowners insurance payment(s). Instead, the borrower receives a monthly amount that is taken from the existing equity.