1 (866) 861-5708

BETH HOFFMAN
BROKER/OWNER

 


   

 

1 (866) 861-5708

BETH HOFFMAN
BROKER/OWNER

 


   

 

Types of Loans

  • Thirty-Year Fixed Rate Mortgage
  • Fifteen-Year Fixed Rate Mortgage
  • Hybrid ARM (3/1 ARM, 5/1 ARM, 7/1 ARM)
  • Adjustable Rate Mortgage (ARM)
  • 2/1 Buy Down Mortgage
  • Annual ARM
  • Monthly ARM
  • Negative Amortization (Neg. Am)

  • Thirty-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. As a rule of thumb, it may be harder to qualify for fixed-rate loans than for than 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.
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    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 that will pay off their loan in 15 years. This approach is often safer than committing to a higher monthly payment, since the difference in interest rates isn't that great.
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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.
    Back To Top

    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.
    Back To Top

    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 their average interest rate in line with the original market conditions.
    Back To Top

    Annual ARM

    This loan has a rate that is recalculated once a year.
    Back To Top

    Monthly ARM

    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.
    Back To Top

    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.
    Back To Top

  • Thirty-Year Fixed Rate Mortgage
  • Fifteen-Year Fixed Rate Mortgage
  • Hybrid ARM (3/1 ARM, 5/1 ARM, 7/1 ARM)
  • Adjustable Rate Mortgage (ARM)
  • 2/1 Buy Down Mortgage
  • Annual ARM
  • Monthly ARM
  • Negative Amortization (Neg. Am)

  • Thirty-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. As a rule of thumb, it may be harder to qualify for fixed-rate loans than for than 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.
    Back To Top

    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 that will pay off their loan in 15 years. This approach is often safer than committing to a higher monthly payment, since the difference in interest rates isn't that great.
    Back To Top

    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.
    Back To Top

    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.
    Back To Top

    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 their average interest rate in line with the original market conditions.
    Back To Top

    Annual ARM

    This loan has a rate that is recalculated once a year.
    Back To Top

    Monthly ARM

    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.
    Back To Top

    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.
    Back To Top

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    Licensed by the California Bureau of Real Estate
    License number 00685309
    NMLS number 338105
    Equal Housing Lender
    Licensed by the California Bureau of Real Estate
    License number 00685309
    NMLS number 338105
    Equal Housing Lender