Mortgage Rates

It's important to understand current mortgage rates so you can negotiate the lowest current rate possible.

Fixed Conforming Loans and what they mean to you

• 25, 30 year Fixed Conforming Fixed for the lifetime of the loan. No pre-payment penalties. Most conservative & safest of all products.
• 20 year Fixed Conforming Fixed for the lifetime of the loan. No pre-payment penalties. Great for faster equity build up. Pay-off your loan 10 years earlier and at a lower rate. Saves over $100,000 in interest over the lifetime of the average loan.
• 15 year Fixed Conforming Fixed for the lifetime of the loan. No pre-payment penalties. Great for faster equity build up. Pay-off your loan in half the time and at a lower rate. Saves over $120,000 in interest over the lifetime of the average loan.
• 10 yr Fixed Conforming Fixed for the lifetime of the loan. No pre-payment penalties. Great for faster equity build up. Pay-off your loan in one third of the time and at a lower rate. Saves over $160,000 in interest over the lifetime of the average loan.

Adjustable Mortgage Rates:

How they work and how they affect you. The following information is based on current data showing that the average person keeps their mortgage loan for approximately 4.17 years and that most people refinance every 3-5 years for various reasons, i.e. Lower rates, debt consolidation, college education, etc.

• 3/1 Adjustable Rate Mortgage Lower fixed rate for the first 3 years.
• 5/1 Adjustable Rate Mortgage Lower fixed rate for the first 5 years
• 7/1 Adjustable Rate Mortgage Lower fixed rate for the first 7 years.

Balloon Mortgages

A balloon mortgage if it can be obtained can be a very risky way to finance a piece of property. Balloon mortgages are generally not available from lenders. If one is obtained it is usually from the seller of the property. A balloon mortgage requires that interest be paid over a period of time and at the end of the set amount of time the entire principle in due.

This is very risky because if the borrower is unable to pay the principle at the time or find financing the borrower could lose all the money that is invested in the property.

More on Mortgage Loans:

Reverse Annuity Mortgage (RAM)
For Americans who are 62 years old or older.

The RAM is designed to help supplement those homeowners' income. The lender appraises the property and makes the loan based on a percentage of its current value.

The homeowner retains ownership, and the property secures the loan. The lender then pays an annuity to the borrower, usually on a monthly basis, up to an amount equal to the equity they have in the home.

BEWARE! There are risks involved, however. If the homeowner wants to move and buy a new house, there may not be enough equity in the home to permit such a plan. Or the lender may consider only the current market value of the home rather than any future appreciation when deciding on the monthly payments.

Negatively Amortizing Loans
Some types of ARMs (Adjustable Rate Mortgages)offer payment caps rather than interest rate caps, which limit the amount the monthly payment can increase.

If a loan has payment cap but has no periodic interest rate cap, then the loan may become negatively amortized:
If the interest rates rise to the point that the monthly mortgage payment does not cover the interest due, any unpaid interest will get added to the loan balance, so the loan balance increases. However, you always have the option to pay the minimum monthly payment, or the fully amortized amount due.

Example:

Your loan has a payment cap of 7.5%. If your payment is $1,000 per month and interest rates rise, your new payment would normally be $1,200/mo (for example).

But your capped payment is only $1,075. The other $125 get added to your loan balance, to be paid off over time, unless of course you decide to pay that additional amount now.

JUMBO LOANS

A jumbo loan is any loan whose amount exceeds conforming guidelines.

Conforming loans, which typically have the best interest rates and loan terms in the market, are loans sold to federally chartered agencies—such as Fannie Mae and Freddie Mac.

Such loan must satisfy or "conform" to these agencies' guidelines in order to be purchased.

Because jumbo loans are non-conforming, they charge relatively higher interest rates than similar conforming programs.