Home Loan choices

WHAT SHOULD I DO???

There are more choices then ever when it comes to mortgage loans. Not only can you choose between a fixed or adjustable rate, or a 30 or 15 year term, but you can also choose longer terms like a 40 year term or you can choose interest only. What do all of these choices mean?

40 YEAR TERM

There are two types of 40 year mortgages. There is a true 40 year, which means that your payments are stretched out over 40 years instead of 30, so your home is paid off in 40 years. Then there is a 40 due in 30, which means that the payments are amortized over 40 years, but in 30 years, the balance on the loan is all due, like a balloon payment. If you are not staying in your home, or your loan, for 30 years, then the balloon payment won't matter. The 40 due in 30 rate is usually a little lower then the true 40 year rate. The real difference to you with either of these 40 year loans is the payment. The payment on a 40 year loan at 6.5% interest, and a $300,000 loan amount is $1756.37. The payment for the same loan amount and interest rate over 30 years is $1896.20. So you save about $140 a month going with a 40 year term opposed to a 30 year. Of course, since its a longer term, you are paying more in interest if you stay in the home for the full 40 years.

INTEREST ONLY

Interest only loans are loans where you are only required to pay the interest due on the loan and not the principal. There is no deferred interest, so your principal balance does not increase, it just doesn't go down. You can usually make additional principal payments at any time during the loan, even each month if you choose. It is just not required. On our same loan scenario of $300,000 and a 6.5% rate, the interest only payment would be $1625.00, which is the smallest payment of all our options so far. One unique feature of interest only loans is that if you pay a large lump sum on your mortgage, your payment will adjust down in line with the new balance. Fully amortizing loans, as they are called, where you are paying a principal and interest payment each month, do not adjust your payment down if you pay a lump sum towards the balance.

So now we are back to our original question--what should you do? Talk about these options with your mortgage professional and they can help you decide what is right for you. You need to take into consideration your monthly budget as well as your long term goals. I would be happy to help you sort out the options so you get the right mortgage program for you.

GET PREQUALIFIED!

If you are buying or refinancing, geting pre-qualified is
empowering. Prequalified buyers are confident, educated buyers.
Pre-qualifying before you refinance means you want to know all
your choices. Simply answer the few simple questions below and I
will respond very shortly.

For a Purchase

Purchase Price:
*Primary home or investment?:
*Down Payment?:
*Max monthly house payment:

For a Refinance

*Loan Amount?:
*Cash out? How much?:
*Current balance on all mortgages:
*What is your home's value?:
*Primary home or investment?:

For Both Purchase and Refinance

*Borrower gross monthly Income:
*Borrower credit--good, fair, poor?:
Co-borrower gross monthly Income:
Co-borrower credit--good, fair, poor?:
*Monthly loan, credit card debt, all borrowers:

Additional Information

Details, such as credit issues, etc.:

How can I contact you?

*Name:
*Email:
Phone:

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