Purchase Programs

Understanding the benefits of the various mortgage programs on the market can be a complex process. Mortgages come in many shapes and sizes, and it is important to analyze your specific situation in order to arrive at the best decision.

A mortgage is basically a loan on a property (a home in our particular case) that has to be paid off over a specified period of time. When you decide on a particular mortgage program, I will provide you with an amortization schedule, which will give the monthly payments for both the principal and the interest on loan. This schedule will help to show you how the percentage of principal you pay off increases with each payment, while percentage of interest decreases.

My mortgage solutions include:

Fixed-rate mortgages

Fixed-rate mortgages offer the most stable option for many homebuyers because monthly payments are stable, and the interest rate remains steady. Among the benefits of a fixed-rate mortgage are:

* Inflation protection: If interest rates rise, your mortgage and your mortgage payment won't be significantly affected, even if your taxes or insurance costs go up over time.

* Long-term planning: The fixed-rate mortgage allows you know ahead of time what your monthly housing expense will be for the entire term of your mortgage. In addition, this type of mortgage is preferred if you plan on staying in the house for a long term (5 or more years).

With a fixed-rate mortgage, you can choose from a variety of repayment terms, with 15, 20 and 30 years being the most common. If you choose a 30-year fixed-rate home loan, your monthly payments will be the lowest, but the interest rate will be higher. Alternatively, a 15-year fixed-rate mortgage will result in higher monthly payments, but also allow you to pay off your loan in a shorter period of time, and come with a lower interest rate.

Adjustable-Rate Mortgages

Adjustable-rate mortgages (ARMs) are a popular, high-risk option which involve lower interest rates and lower monthly payments initially. The adjustable-rate mortgage generally allows borrowers to obtain higher loan amounts as well. However, the interest rate can change during the life of the loan, which could result in your monthly payment going up (though it is also possible that your monthly payment could go down, if interest rates go down). The adjustable-rate mortgage is the ideal financial option for the following cases:

* Short-term planning: You plan on living in the property for a short period of time (5 years or less), and consequently you are not concerned about possible interest rate increases.

* Better financial situation expectancy: You are confident that your income will rise enough in the coming years to be able to handle any increase in payments.

* Lowest initial investment: The lower initial interest rate means you can afford to buy a higher-value home.

There are several types of ARMs, such as the 10/1, 7/1, 5/1 and 3/1. The first number (10 for example) is the length of the initial period, during which the interest rate cannot change. The second number (1 for example) represents how often the ARM is adjusted after the initial period. So, with a 10/1 ARM, your interest rate will not change over the first 10 years, but can change in the 11th year, and then again once a year after that. Depending on the initial cap (that is, the amount by which the interest rate can increase or decrease at each adjustment period, as well as over the life of the loan), the change in your interest rate could be as high as 5 percentage points above what it was before. You also need to consider additional financial factors, such as indices and margins, caps, and adjustment periods. These are some of the reasons why the adjustable-rate mortgage is considered a high-risk option.

FHA and VA Loans

FHA and VA Loans are special loans that are backed by government agencies such as the Department of Housing and Urban Development (HUD), the Federal Housing Administration (FHA) and the Veterans Administration (VA). These mortgages offer the borrower the ability to put as little as 3% as an initial down payment. These mortgages can even finance “allowable” closing costs. The seller can contribute up to 6% of the purchase price towards closing costs, for the benefit of the buyer.

Certain requirements must be fulfilled in order to qualify for any of these loans. For example, in order to qualify for a VA loan, you need to be a qualified Veteran or military person.

Other programs

We have further programs that can accomodate your goals and expectations related to the home loan process. If you would like to learn more about any of the home loan options mentioned above, or would like to find out what further options I can assist you with, please contact me. Remember that it is my pleasure to help you obtain the best financial solution possible to fit your particular needs.