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30-year Fixed Rate Mortgage
The traditional 30-year fixed-rate
mortgage 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, then
adjustable-rate loans are usually cheaper.
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15-year Fixed Rate Mortgage
The 15-year fixed-rate mortgage has a
constant interest rate and monthly payments that never
change. 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, but generally a
lower interest rate. The advantage is paying off your
loan much quicker and paying less interest. The
disadvantage is a higher monthly payment.
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Balloon Mortgage
A mortgage with level monthly
payments that amortizes over a stated term but also
requires that a lump sum payment be paid at the end of
an earlier specified term. For example:
5 year balloon payment requires paying the loan off in 5
years or refinancing.
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Bridge Loan
A second trust that is
collateralized by the borrower's present home allowing
the proceeds to be used to close on a new house before
the present home is sold. Also known as "swing loan."
A Bridge loan requires qualify for the total amount of
payments and having the necessary equity.
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2/1 Buy Down Mortgage
The 2/1 Buy-Down Mortgage allows the
borrower to qualify at below market rates so they can
borrow more. The initial starting interest rate
increases by 1% at the end of the first year and adjusts
again by another 1% at the end of the second year. It
then remains at a fixed interest rate for the remainder
of the loan term. Borrowers often refinance at the end
of the second year to obtain the best long-term rates.
However, keeping the loan in place even for three full
years or more will keep the average interest rate in
line with the original market conditions.
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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.
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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.
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Interest-only loan
A loan on which one pays
periodic interest payments without any reduction in
principal,and the entire principal balance is due and
payable upon maturity of the note. |
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Negative Amortization (Neg.
Am) Loan
This is a deferred-interest loan
which is very powerful -- and the most misunderstood
mortgage program because of its many options. Basically,
the lender allows the borrower to make monthly payments
that are less than the accruing interest. Therefore, if
the borrower chooses to make the minimum monthly
payment, the loan balance will increase by the amount of
interest not paid on the loan. The power of this loan
lies in the borrower's ability to choose between making
the full loan payment, or the minimum payment, or any
amount in between. If a borrower's income varies
throughout the year (due to commissions, bonuses, etc.),
the borrower can make a lower payment during the "lean
times", and then make higher payments when funds are
readily available.
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Reverse mortgage.
A reverse mortgage is a loan
available to a homeowner 62 or older who may be eligible
to borrow against the equity in his or her home.
Generally with a reverse mortgage, you receive money
from a lender while you stay in your home. You don't
have to pay the money back for as long as you live there
and keep the property in good repair, but the loan must
be repaid when you die, sell your home, or move to a
different primary residence. The amount you can borrow
depends on your age, your home's value, your equity in
it, and current interest rates. You can access the money
as a lump sum, a line of credit, or a combination of
these methods.
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"Wrap Around" Mortgage
A mortgage that includes the
remaining balance on an existing first mortgage plus an
additional amount requested by the mortgagor. Full
payments on both mortgages are made to the "Wrap Around"
mortgagee, who then forwards the payments on the first
mortgage to the first mortgagee. These mortgages may not
be allowed by the first mortgage holder, and if
discovered, could be subject to a demand for full
payment.
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Fannie Mae
A congressionally chartered,
shareholder-owned company that is the nation's largest
supplier of home mortgage funds. [website]
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FHA Mortgage
A mortgage that is insured by the
Federal Housing Administration (FHA). Also known as a
government mortgage. [website]
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WCDA
Wyoming Community Development
Authority has provided programs to promote home
ownership by offering below-market interest rate loans
to first-time homebuyers and down-payment assistance
loan programs. [website]
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Freddie Mac
A stockholder-owned corporation
chartered by Congress in 1970 to keep money flowing to
mortgage lenders in support of homeownership and rental
housing. [website]
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Rural Development
[website] |
SHAC SHAC offers financing options to
enable income-qualified buyers to purchase a home.
SHAC offers gap financing, and downpayment
assistance. [website]
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This loan has a rate that is recalculated once
a year.
With this loan, the interest rate is
recalculated every month. Compared to other options, the rate is
usually lower on this ARM because the lender is only committing
to a rate for a month at a time, so his vulnerability is
significantly reduced.
