Mortgage Loans

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You've probably already realized that shopping for mortgages, loans or credit cards is complex, considering all of your available options. Our purpose is to provide you with a simple way to find a local lender and learn about important mortgage information.

Fixed Rate Mortgages: A conventional fixed-rate mortgage offers you a set rate and payments that do not change throughout the life or "term", of the loan. A conventional loan is fully paid off over a given number of years, usually 15, 20 or 30. A portion of each monthly payment goes towards paying back the money you borrowed, the "principal", and the rest is "interest".

Temporary Buy-Downs Mortgages: A temporary buydown on a loan is achieved by lowering the rate for the first few years, starting out at a lesser amount and gradually rising to the original loan rate. Of course, because the loan rate is lower for the initial few years, so are the payments. To make up this loss of funds to the lender, the buydown usually consists of extra monies paid up front to the lender when the loan closes. In return, the lender will let the borrower "qualify", or meet the criteria for the loan, at the new, reduced rate.

Balloon Mortgage Loans: This is a special type of conventional, fixed-rate mortgage with a much shorter term. In a balloon mortgage, the terms and payments are usually the same as their conventional loan counterpart, but the balance is due in full on the loan at the end of a specified, much shorter term.

Adjustable Rate Loans (ARM's): An "ARM", or "Adjustable Rate Mortgage" has a fluctuating interest rate and the potential for changing payment amounts. In most ARM mortgages, the interest rate on a loan is fixed for a certain number of years and then allowed to fluctuate in sync with current economic factors. An ARM is of value to the lender because the risks of lending money in a changing economy are passed on to the borrower. In exchange, most lenders are able to offer a lower initial interest rate to the borrower in exchange for their assumption of this risk.

Should you refinance? This refinancing tip will answer some questions that may help you decide.

• If you are a homeowner who was lucky enough to buy when mortgage rates were low, you may have no interest in refinancing your present loan. But perhaps you bought your home when rates were higher. Or perhaps you have an adjustable rate loan and would like to obtain different terms.
• Want to get out of a high interest rate loan to take advantage of lower rates. This is a good idea only if you intend to stay in the house long enough to make the additional fees worthwhile.
• Have an adjustable rate mortgage (ARM) and want a fixed-rate loan to have the certainty of knowing exactly what the mortgage payment will be for the life of the loan.
• Want to convert to an ARM with a lower interest rate or more protective features (such as a better rate and payment caps) than the ARM they currently have.
• Want to build up equity more quickly by converting to a loan with a shorter term.
• Want to draw on the equity built up in their house to get cash for a major purchase or for their children's education.