When Should I Get a 15-Year Fixed Loan?

Fifteen-year loans became quite popular in the 90′s. Thanks to historically low rates, borrowers can use a 15-year loan to pay off their home loans quickly without an unbearably high mortgage payment.

The benefits are simple: You could own your house free and clear more quickly and you m... Read More.

Fifteen-year loans became quite popular in the 90′s. Thanks to historically low rates, borrowers can use a 15-year loan to pay off their home loans quickly without an unbearably high mortgage payment.

The benefits are simple: You could own your house free and clear more quickly and you might save a great deal of interest. For example, a couple in their mid-40s may like this concept knowing that by the time they reach age 60, they own their home and will no longer have mortgage payments. For a young couple in the mid-20s, it may not make as much sense as having a longer term 30-year loan.

The key to deciding is to compare the monthly payments and see how comfortable you are with the higher payments of a 15-year loan. If you want to pay off your loan early but can’t quite handle the payments on a 15-year loan, ask us about our 20-year loans. For those who want to pay off their loan even more quickly, we can offer a 10-year fully amortizing loan.

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What are Conforming, High Balance and Jumbo Loan Programs?

Conforming Loans are loans that meet Fannie Mae (FNMA) and or Freddie Mac (FHLMC) underwriting requirements. In other words, income, credit, and property requirements must meet nationally standardized guidelines. There are additional guidelines, pricing and restrictions regarding conforming loans... Read More.

Conforming Loans are loans that meet Fannie Mae (FNMA) and or Freddie Mac (FHLMC) underwriting requirements. In other words, income, credit, and property requirements must meet nationally standardized guidelines. There are additional guidelines, pricing and restrictions regarding conforming loans for manufactured housing.

Conforming loans are subject to loan amount limits that are set annually by Fannie Mae and Freddie Mac. These limits vary based on the region in which the subject property is located as well as the number of legal units contained in the subject property. Under the FNMA and FHLMC Charter Acts, the loan limits are 50% higher for first mortgages in Alaska, Hawaii, Guam, and the U.S. Virgin Islands.

When FNMA and FHLMC limits don’t cover the full loan amount, the loan is referred to as a jumbo mortgage. The average interest rates on jumbo mortgages are typically higher than for conforming mortgages.

A high-balance mortgage loan is between a “conforming” and a “jumbo” loan. The loan amounts for a high-balance loan depend on the county you live in. Rates on a high-balance loan are typically higher than conforming but less than jumbo. Jumbo investors may have additional overlays and qualification requirements above FNMA/FHLMC.

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When Should I Get a 30-Year Fixed Loan?

The traditional 30-year fixed rate mortgage has a constant interest rate with the monthly payments (principal and interest only) that never change for both conforming and jumbo loan programs. This may be a good choice if you plan to stay in your home for seven years or longer. If you plan to move... Read More.

The traditional 30-year fixed rate mortgage has a constant interest rate with the monthly payments (principal and interest only) that never change for both conforming and jumbo loan programs. 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, adjustable-rate loans are usually more cost effective.

As a rule of thumb, fixed-rate loans may be harder to qualify 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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Adjustable Rate Mortgage (ARM)

A mortgage in which the interest rate is adjusted periodically based on a pre-selected index. It is also sometimes referred to as the renegotiable-rate mortgage, variable-rate mortgage, or Canadian-rollover mortgage.

Adjustment Interval

On an adjustable-rate mortgage, it is the time between changes in the interest rate and/or monthly payment — typically one, three or five years, depending on the index.

Amortization

Loan payment of equal periodic payments calculated to pay off the debt, as well as the accrued interest on the outstanding balance, at the end of a fixed period.

Suggested Documents

After you complete your loan application, you’ll be be required to supply a variety of different forms, including information about your present property, employment and income, assets and liabilities, and the home you’re purchasing. Be prepared, and review the documents you’ll need.