Author: Joe268 | Total views: 50 Comments: 0
Word Count: 695 Date: Thu, 6 Mar 2008 8:17 PM

Which Mortgage Is Best For You?

A popular trend for Americans is to seek low rate home loans especially those who are first time homebuyers. Sellers are also getting the message and responding by reducing the asking price. There is also recent drop in mortgage interest rates that is encouraging the first time homebuyers to start applying for mortgage loans. Following are the various mortgage loan options available:

Fixed rate mortgage :

30 Year Fixed Rate - the interest rate is fixed for 30 years and the mortgage is fully amortized in 30 years if the amount payment schedule is followed.

20 Year Fixed Rate - the interest rate is fixed for 20 years and the mortgage is fully amortized in 20 years if the amount payment schedule is followed.

15 Year Fixed Rate - the interest rate is fixed for 15 years and the mortgage is fully amortized in 15 years if the amount payment schedule is followed.

10 Year Fixed Rate - the interest rate is fixed for 10 years and the mortgage is fully amortized in 10 years if the amount payment schedule is followed.

Fixed Rate Balloon Mortgage

7/23 Conforming Mortgage rate is fixed for 7 years and then converts to a new fixed rate for the remaining 23 years. The new rate is based on the Fennie Mae net yield index and is added to a predetermined margin. Converting to the new rate is only permitted if the prescribed conditions are met and if not met, then the loan is due and payable to the lender as a balloon loan. The loan is amortized for 30 years if the normal payment schedule is followed.

5/25 Conforming Mortgage rate is fixed for 5 years and then converts to a new fixed rate for the remaining 25 years. The new rate is based on the Fennie Mae net yield index and is added to a predetermined margin. Converting to the new rate is only permitted if the prescribed conditions are met and if not met, then the loan is due and payable to the lender as a balloon loan. The loan is amortized for 30 years if the normal payment schedule is followed.

30/15 (30 due in 16)- the rate is fixed for 15 years and the payment is amortized over 30 years to facilitate lower monthly payments. This loan is due and payable as a balloon loan at the end of 15 years.

Intermediate A R M's:

10/1 ARM's - the rate is fixed for 10 years after which in the 11th. year the loan becomes an adjustable rate. The adjustable is tied to the treasury index of 1 year and is added to a predetermined margin to arrive at new monthly rate. The margin, life cap and periodic caps of ARM will be in the 11th.year. The loan is fully amortized in 30 years if the normal payment schedule is followed.

7/1 ARM's - the rate is fixed for 7 years after which in the 8th. year the loan becomes an adjustable rate. The adjustable is tied to the treasury index of 1 year and is added to a predetermined margin to arrive at new monthly rate. The margin, life cap and periodic caps of ARM will be in the 8th.year. The loan is fully amortized in 30 years if the normal payment schedule is followed.

5/1 ARM's the rate is fixed for 5 years after which in the 6th. year the loan becomes an adjustable rate. The adjustable is tied to the treasury index of 1 year and is added to a predetermined margin to arrive at new monthly rate. The margin, life cap and periodic caps of ARM will be in the 6th.year. The loan is fully amortized in 30 years if the normal payment schedule is followed.

3/1 ARM's the rate is fixed for 3 years after which in the 4th. year the loan becomes an adjustable rate. The adjustable is tied to the treasury index of 1 year and is added to a predetermined margin to arrive at new monthly rate. The margin, life cap and periodic caps of ARM will be in the 4th.year. The loan is fully amortized in 30 years if the normal payment schedule is followed.

About the Author

Joe Kenny writes for Rebuild.org, offering home equity loan deals, they also have some great offers on mortgages..

Visit today: Loans at Rebuild.org

Rate, comment or bookmark this article

Seed Newsvine

Bookmark this article in your preferred program

Comments

No comments posted.

Add Comment

HTML code

Popular Articles in this cathegory

1: Adjustable Rate Mortgages Are OK For The Short Run

When you go for mortgage quotes for the first time, you'll find there are generally two major options available. The first, and most commonly sought after, is a fixed rate mortgage. The second option ..

2: Reverse Mortgages: A Financial Solution for Those Caring for Aging Parents

Caring for aging parents can be a trying experience. As your parents or aging loved ones become more dependent on other people, you want to try and preserve as much self dignity as possible. Most ag..

3: Retirement Planning and Reverse Mortgages

Reverse mortgages are one of the most innovative and advantageous financial products available to Americans today. They aren't like refinance mortgages or second mortgages. Reverse mortgages actuall..

4: Reverse Mortgages or Relocation? A Guide for Retirees Ready to Enjoy Their Home Equity

If you're like most people, you're ready to retire at the age of 65 but need some way to supplement your income after the paycheck stops arriving. The good news for today's retirees is that all of th..

5: 10 Facts about Reverse Mortgages

Reverse mortgages are more popular than ever among those aged 62 and over. In fact, the number of RMs issued doubled between 2003 and 2005 yet many people still either haven't heard of reverse mortga..

This article is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 License.