Find the Right Financing For YOU!

There are many different types of mortgages available to home buyers.  Which one is right for you?  Read to find out.

Fixed-Rate Mortgage - This loan is also called a conventional loan.  In a fixed rate mortgage the homeowner's interest rate and total monthly payment (interest/principle) stay the same for the entire term (or length) of the loan.  The most common Fixed-Rate Mortgage terms are 15 year and 30 year loans.  

This type of loan is good for:

  • Home buyers who plan to stay in their home for a long time
  • Times when interest rates are expected to rise
  • Home buyers who prefer the stability of a fixed principle/interest payment

Adjustable-Rate Mortgage (ARM) - An Adjustable-Rate Mortgage differs from Fixed-Rate Mortgages in that the interest rates and mortgage payment fluctuates overtime.  Typically, the initial interest rate for ARM is lower than the rate for a Fixed-Rate Mortgage.  This initial rate is "fixed" for a short period of time usually somewhere between 1 and 10 years.  After the "fixed" rate period, the loan changes based on an index spelled out in the closing documents.  The most common types of ARMs are 2/28 (the loan is fixed for 2 years and adjusts for 28 years) and 3/27 (the loan is fixed for 3 years and adjusts for 27 years). 

This type of loan is good for:

  • Home buyers who plan to stay in their home for a short period of time
  • Times when current fixed interest rates are, too, high

Federal Housing Administration (FHA) Loan - FHA loans can only be issued by Federally qualified lenders.  These loans are insured by the Federal Housing Administration and are designed to help low to moderate priced home buyers purchase a house.  There are many perks associated with an FHA loan: home buyers can borrow up to 97% of the value of the home; borrows can have less than perfect credit; some closing costs can be covered.  However, there is a limit to the size amount of money a home buyers can borrow. This limited varies greatly depending on the location of the home.

This type of loan is good for:

  • First time home buyers
  • Home buyers who do not have a lot of money for a down payment
  • Buyers with less than perfect credit

VA Loan - VA Loans available though local banks and mortgage institutions around the country.  These loans are guaranteed by the Federal Government.  Only honorably discharged veterans, currently serving/active duty servicemen and women, National Guard and Selective Servicemen and women who have served a minimum of 6 years, and the surviving spouses of veterans are eligible for this type of loan.  VA Loans provide many benefits including:  no down payments, mortgage insurance (PMI) is not required, and no minimum credit score is necessary.  The limit on VA loans vary by county, but it's $417,000 in most parts of the country and up to $1,094,625 in high-cost areas.

This type of loan is good for

  • Honorably discharged veterans, active duty personnel, Nation Guard and Selective Service persons with a minimum of 6 years of service, and surviving spouses of veterans.

Balloon Mortgage - A Balloon Mortgage is a type of short term loan with low payments for a specific number of years.  These payments are typically lower than those associated with Fixed-Rate Mortgages.  However, once the specified time period is over, the borrow is required to pay off the loan (principle) in one lump sum.  That means the borrower would need to have the money available to pay off the principle or refinance the loan.  

This type of loan is good for

  • Borrowers who will have an increased income in the future

NOTE:  Borrows should explore their options and think carefully before getting a Balloon Mortgage

Land Contract - Land contracts, also known as Trust Deeds, Deeds of Trust, Contract for Deed, Notes, or Privately Held Mortgages, are seller-financing agreements that allow a buyer to pay the seller directly for their home over time without using traditional lenders.  The buyer pays an agreed-upon cash down-payment at the signing of the land contract, and further agrees to make regularly scheduled payments until the price has been paid in full. The contract may stipulate monthly payments until the entire amount has been paid, or it may demand a final balloon payment at some agreed-upon time in the future.  The deed is not transferred from the seller to the buyer until the price of the home as been paid in full.  If the buyer fails to make regular payments to the seller, the seller has the right to evict the buyer and retain the money paid as a form of "rent" payment.  

This type of loan is good for

  • Borrowers with less than the required down payment for a traditional loan
  • Borrowers with poor credit
Joe Blachy

Joe Blachy

Associate Broker
Contact Me