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Types of Loans

Thirty-Year Fixed Rate Mortgage

The traditional 30-year fixed-rate home loan has a constant interest rate and monthly payments that never change. This may be a good choice if you plan to stay in your home for seven years or longer. If you plan to move within seven years, you may want to consult your Loan Officer regarding the advantages of an adjustable-rate mortgage. As a rule of thumb, it may be harder to qualify for fixed-rate loans than for adjustable rate loans. When interest rates are low, fixed-rate loans are generally not that much more expensive than adjustable-rate mortgages and may be a better deal in the long run, because you can lock in the rate for the life of your loan.

Fifteen-Year Fixed Rate Mortgage

This loan is fully amortized over a 15-year period and features constant monthly payments. It offers all the advantages of the 30-year loan, plus a lower interest rate—and you’ll own your home twice as fast. The disadvantage is that, with a 15-year loan, you commit to a higher monthly payment. Many borrowers opt for a 30-year fixed-rate loan and voluntarily make larger payments to expedite the payoff of their mortgage. This approach is often safer than committing to a higher monthly payment. Consult your Loan Officer to determine what best suits your needs.

Hybrid ARM (3/1 ARM, 5/1 ARM, 7/1 ARM)

These increasingly popular ARMS—also called 3/1, 5/1 or 7/1—can offer the best of both worlds: lower interest rates (like ARMs) and a fixed payment for a longer period of time than most adjustable rate loans. For example, a 5/1 loan has a fixed monthly payment and interest for the first five years and then turns into a traditional adjustable-rate loan, based on then-current rates for the remaining 25 years. It’s a good choice for people who expect to move (or refinance) before or shortly after the adjustment occurs.

Adjustable Rate Mortgages (ARM)

When it comes to ARMs there’s a basic rule to remember…the longer you ask the lender to charge you a specific rate, the more expensive the loan.

203 (k) Loan

For the home improvement enthusiast who wants the benefits of a customized home before move in, but without the extensive wait time associated with a new build, the renovation loan is a balanced alternative.

With a renovation loan, also known as a 203 (k) loan, a buyer can take advantage of the opportunities in purchasing a distressed or foreclosed home. Perhaps the home of choice is in that perfect neighborhood, but the property itself is in not so perfect condition. In addition, there are costs associated in getting the property to inspection- or appraisal-approved condition but the seller has no financial means to fix it.

With a renovation loan, an appraiser goes to the property, finds the non-cosmetic issues that need to be fixed. The buyer then adds the other items that need modification, such as new flooring, a new bathroom, kitchen cabinets, appliances, and more.

The appraiser then creates a value for the home with all the items included. The buyer would then need to be approved for the loan amount that includes the renovation. The buyer offers the seller a price for the home excluding the cost of the renovation.  Once the on-time closing takes place, the funds left over for the renovation will be held back in escrow, to be disbursed to the contractor(s) as the renovation progresses to completion.

Give a dream home a touch of your own. Download our PDF to learn how our 203 (k) renovation loan can help you.

Refinance

Often times the smartest move you can make on a home is to not make a move at all. Stay where you are but take a second look at your current loan. Are there benefits to switching the term of your loan? Perhaps you want to reduce to a 25, 20, 15, or even a 10 year term in preparation for college expenses or retirement. Can you capitalize on a lower rate, or go from adjustable to fixed?
Real estate market fluctuations can change the value of neighborhoods. Life’s circumstances, planned or unexpected, can affect how the benefits of your current loan may be perceived.

A home purchase eight years ago using an FHA loan may have created additional equity in your property, enough to cover the 20 percent needed to refinance into a conventional loan. Eliminating the need for mortgage insurance is one move that can decrease your monthly payment.

To discuss the various financing opportunities available to maximize how your mortgage can really go to work for you, consult a Community Mortgage Loan Officer. With refinancing, the numbers tell the story. Your mortgage loan specialist will explain the costs. Together, you can determine if refinancing is in your best interest.

USDA Rural Development

Rural Development Loan Assistance by the USDA provides program assistance in several ways, including direct loans, guaranteed loans, grants, and technical assistance. For more information, consult your Community Mortgage Loan Officer.