Mortgage loan information

Mortgage loan information outlines various loan types for when you apply for a loan. Also, please click here for our step by step home buying guide.

ARM’s are stated with two numbers, such as 3/1 or 5/1. The first number represents the length of time the initial interest rate is guaranteed to remain fixed. The second number indicates how often the rate will change after the initial guaranteed time period. For example, with a 5/1 ARM the rate is fixed for the first five years, after the first five years the rate will then change every year. When the interest rate on an ARM adjusts, the new rate is calculated by a predetermined formula which is disclosed at the time of application. The most common ARM’s are the 1/1, 2/1, 3/1, 5/1, 7/1 and 10/1.

The two basic balloon programs are the 5/25 and the 7/23. Each program amortizes your payments over 30 years and initially guarantees your interest rate for the first five and seven years respectively. After the initial rate guarantee, the loan may adjust to a fixed rate for the remaining term of the loan or the loan may come due which means you will need to refinance the mortgage.

A mortgage which is not insured by FHA or guaranteed by VA.

A loan insured by the Federal Housing Administration open to all qualified home owners.
The basic benefits of a FHA loan is a minimum down payment and lower closing costs however, there are maximum loan limits which vary per state and county.

With a fixed rate mortgage program your rate remains at the same rate for the term of the mortgage. The most common terms are 15, 20 and 30 years.

Typically, a jumbo means a loan amount above $529,000.
Sometimes the interest rates for loan amounts above $417.000 may be slightly higher

A loan Estimate is a disclosure providing a detailed breakdown of the various costs, including the estimated interest rate, monthly payment, pre-paids and and total closing costs for the loan.

Commonly quoted as a percentage of the loan amount. When you pay an origination fee you are prepaying interest up front in return for a lower interest rate. For example, on a $100,000 loan with a 1% origination fee, the cost is $1,000. As a rule of thumb, a 1% origination fee will decrease the interest rate by a 1/4%. The origination fee usually varies form 0%-2%.

Private Mortgage Insurance is insurance borrowers pay when they have less than
20% equity in the subject property. This insurance protects the bank if the mortgage is defaulted.

The Closing Disclosure is a form that lists all final terms of the loan you’ve selected, final closing costs, and the details of who pays and who receives money at closing. Your lender sends you a Closing Disclosure at least three business days before closing.

Loans guaranteed by the Department of Veterans which offer zero or minimum down payment options to qualified veterans or military persons.

This program allows a person(s) to purchase a home with no money down and in some cases the closing costs and pre-paids may also be financed. Typically, the interest rates are slightly higher.

Each of the three national consumer credit reporting agencies calculate a credit score for individuals with consumer debt. Credit scores are calculated using several factors, such as past payment history, number of existing debts, types of credit and credit utilization. Scores may range from 300-900, however scores above 800 are very rare.