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More Popular Loan Programs
Fixed-Rate Mortgage Types
This is the most popular loan type in the United States. Options inlcude 10, 15, 20, 30, 40 and 50-year fixed-rate mortgages. All of these loans are 100% amortized.
FHA Loans
These are government-backed loans via mortgage insurance that is rolled into the loan. This type of loan is typically what first-time home buyers use because the down payment requirements are lower and FICO scores aren’t as important.
VA Loans
This is a government loan available to veterans who are serving or have served in the U.S. Armed Services and were honorably discharged. In certain situations these loans are also available to spouses of deceased veterans. The requirements are not any different than a fixed-rate mortgage in that applicants must sill qualify through a combination of credit score, income, debts, bankruptcies, etc. A Certificate of Eligibility (COE) is also required. These loans are funded by conventional lenders and guaranteed by the Department of Veteran Affairs.
Interest-Only Mortgages
Interest-only mortgages are setup so that the borrower pays only the interest on the loan for a specified amount of time. The period of time specified is typically 5-10 years though some 30-yeaer interest only loans exist where a balloon payment is due when the note matures.
Hybrid Mortgage Loans
Option ARM Mortgages
Option ARM loans can be complicated. These are adjustable-rate mortgages, meaning the interest rate fluctuates periodically and borrowers can choose from a variety of payment options and index rates.
Combo or Piggyback Mortgage Loans
This is a combination of 2 loans: a first mortgage and a second mortgage. Thse types of loans are beneficial when borrowers don’t have or don’t want to put 20% down and want to avoid paying Private Mortgage Insurance (PMI). Each individudal mortgage can be either fixed-rate or adjustable.
Adjustable-Rate Mortgages
Adjustable-Rate Mortgages are also known as ARMs. The main idea is that the interest rate fluctuates up or down monthly, semi-annually or annually. These mortgages can also have a fixed-rate term prior to the adjustable rates kicking in.
Bridge Loans
These types of mortgages are typically used when a home owner has their home on the market to sell, but it has not sold yet, and they are ready to purchase another home. The equity in the existing home is used as security for this bridge loan.
Equity Mortgages
These are more commonly called home equity loans and are in second or third position. Borrowers can take out these types of loans to receive cash or for home improvements. These mortgages can be fixed or adjustable or may also be issued as a line of credit.
Reverse Mortgages
These mortgages are for people over the age of 62 who have sufficient equity in their home or their home has been paid in full. Instead of making monthly payments the home owner will receive monthly payments from the lender for as long as the borrower stays in the home. These loans can be either fixed-rate or adjustable.