What kind of loan am I getting?
HI,
We haven't been posting as much lately as we like to. So, let's remedy that. We like to present general knowledge info periodically. Although we have posted this type of info before, we realize that not everyone is going to go back through months of our blogs. We know that sometimes people just want to get some basic info. Don't forget we are always here to answer the more in depth questions.
Today, we are going to give some basic definitions regarding loans. There has been a lot of talk lately about the problems in the mortgage markets. Knowing what might work best for your personal situation is key. Loan guidelines have become stricter, so having knowlege up front will help you in making the choice that is right for you.
Here are some basic explanations of different types of loans. For more detailed information please contact a lender.
Adjustable Rate Mortgage (ARM) - This loan provides an interest rate that is periodically adjusted to more closely tie to current rates. The amount and time of changes in the rate are agreed to at the initial start of the loan.
Fixed Rate Loan - A loan with one set interest rate that remains constant over the life of the loan.
Conventional Loan - A mortgage that is not obtained under government insured prgrams, backed by investors
FHA Loan - Loans insured by the Federal Housing Administration under H.U.D. This type of loan offers low down payments and easier qualifying
VA Loan - A loan that can be up to 100%, secured by the government for people who have served in the armed forces. The buyer typically pays little or no costs of the purchase.
Balloon Payment Loan - A loan that is amortized over the typical 30 year period, but is due and payable at the end of a certain term less than 30 years. For example, it may be amortized over 30 years to provide for lower monthly payments, but is fully due in 10 years.
Buydown - A loan that has a reduced rate and payment for a specific period of time. This is done by paying points or interest up front.
Community Homebuyer's Program - This is a first time buyer program with a fixed rate and low down payment, often 3-5%. There are no cash reserve requirements and qualifying ratios are easier. These loans are subject to the buyer meeting all income standards and completing a four hour training class.
This is not an exhaustive list, but does provide the most common options. Next time we will discuss things to avoid when applying for a loan.
If you are considering the purchase or sale of a home in the Phoenix / Scottsdale area, please contact us for more information. We will be happy to discuss our services with you.
Have a great day.
Adam Tarr, ABR, e-Pro
Sharon Kotula, ABR
Youe Phoenix Area Real Estate Source
RE/MAX Excalibur
Scottsdale, AZ
480-483-3333
info@WeAreAZRealEstate.com