Mortgage Options 2018-09-03T14:03:43+00:00

What Are Your Options?

Mortgages come in many shapes and sizes. Which one is right for you? Every mortgage has three key elements: The loan type, a rate, and a term. By knowing how these elements work together, you will be able to pick out the best mortgage for your situation. 

Click on each loan category to learn more about our loan options:
FHA or “Federal Housing Administration” is a government administered loan that is easy to qualify for. They require low down payments and allow lower credit scores, but are generally more expensive to own over long periods of time. This is because they feature a funding fee as well as increased mortgage insurance requirements to protect the lender from default. 
Advantages of FHA Loans Include:
  • Lower Credit Score Requirements (down to 580)
  • Low down payment options (3.5%)
  • FHA streamline refinance option (if you already have an FHA Loan)
  • You may qualify even if you’ve had financial difficulties in the past, like a bankruptcy.
  • You may be able to incorporate your closing costs into the loan. 
 
Conventional loans are the go to option. They may be a little harder to qualify for versus an FHA loan but they typically end up being cheaper in the long run. You can avoid paying private mortgage insurance with down payments greater than 20%. 
VA Loans are exclusive to veterans., eligible surviving spouses, and active-duty service members. VA loans offer these groups the option to buy homes with no down payment and no private mortgage insurance. Furthermore, the rates offered to VA eligible borrowers are much better than conventional interest rates.
Benefits of VA Loans Include:
  •  Most veterans and service members do not need a down payment.
  • You can qualify with a lower credit score and more debt when compared to conventional loans
  • VA loans have lower interest rates, saving you money over time. 
VA Refinancing Benefits Include:
  • Better interest rates versus home equity loans and lines of credit.
  • You can borrow up to 100% of your home’s value with a VA cash-out refinance.
 

Will you help explain each option to me in more depth?

Yes! We often find that people can get confused when deciding on which option is best. We will do our best to give you the information you need so you can make the right decision. 

Rate Type

There are two types of mortgage rates, and they are fixed rates and adjustable rates.

Fixed Rates stay the same for the life of the loan. Your month to month mortgage payment will always stay the same. Adjustable rates are fixed for a certain period of time (usually 3, 5, 7 or 10 years) and then adjust up or down once per year according to market conditions. 

Benefits of Fixed
Rates

  • Fixed rates will stay the same for the life of the loan
  • You can easily keep track of future payments and housing expenses. These will never change
  • If interest rates go up, yours will stay the same.

Benefits of Adjustable Rates

  • They are usually lower than fixed rates initially.
  • If rates go down, your rate will adjust downwards as well.
  • Great if you plan on moving or refinancing after the initial fixed period ends 

How much will I pay towards principal and interest?

Use our amortization calculator to see a breakdown of payments and see how additional payments can save you money on interest. 

Term

The term of the loan is its length. Most mortgages are 15, 20, or 30 year terms. We can also create a custom term for you if it fits your goals.

What is the difference between terms? A longer term will mean a lower monthly payment. If you want to keep your outgoing payments low, this is a good option for you. It also, however, carries more interest in the long run. 

A shorter term means you will pay off your mortgage faster, so there will be less interest paid overall. You also build equity much faster in the home. The potential downside is that the monthly payment will usually be much higher than a longer term mortgage because the amount paid towards principal each month is greater. 

Other Payments?

Your monthly mortgage payment is usually made up of more than just principal and interest. It may also include your property taxes and insurance. 

If you choose to hold an “escrow account” with your mortgage, your property taxes and home insurance payments will be included in your monthly mortgage payment. Although those two items are paid on an annual basis, you can make monthly payments towards them and then use the lump-sum of payments you made when the taxes and insurance comes due. This is known as an escrow account. This is optional and you can pay the taxes and insurance on your own once per year if you choose to do so.