• 30-year conventional fixed rate loan - benefits include:
  • Monthly payments for principle and interest remain the same over the life of the loan
  • Lower monthly payments when amortized over a 30-year payment period.

• 10, 15 or 20-year conventional fixed rate loans - Benefits include:
  • Monthly payments of principle and interest remain the same over the life of the loan
  • Substantial savings of interest over the life of the loan
  • Payments are approximately 25-30% higher when amortized over a shorter period of time.

• No-Point/Zero Closing Cost loan - Benefits include:
  • Less cash needed at closing. The interest rate will usually be ½ to ¾ of a percent higher when compared to loans that have points to pay at closing.

• 7-year fixed rate balloon w/ 30-year amortization - Benefits include:
  • Slightly lower rate and/or less fees than the conventional 30-year fixed rate loan.
  • Payment of principle and interest remains the same over the 7-year period of time (at the end of 7 years, you will need to pay off the remaining balance with either a lump sum of cash or re-finance the remaining loan amount).

• Adjustable Rate Mortgages (ARM) - There are many options with ARMs; the most popular tends to be the 1-year ARM with a 30-year amortization schedule. Benefits include:
  • Lower interest rate for the 1st year
  • Easier to qualify for the loan amount
  • You can qualify for a larger loan amount
  • A year ARM offers the ability to adjust downward at the 1 year anniversary of your loan.

• 80/10/10 Conventional Loans
  • a loan program that consists of an 80% first mortgage + a 10% second mortgage + a 10% down payment. In this case, since there is no mortgage insurance required, the buyer will save the monthly premium.

• Index Rate - the rate to which the interest rate on an adjustable rate loan is tied. One of the more popular indexes used is the 1-year U.S. Treasury bill.

• Margin - the amount added to the index rate that represents the lender’s cost of doing business.

• Interest Rate Cap Per Adjustment - the maximum amount a borrower’s interest rate may increase or decrease at the time of adjustment..

• Life Cap - this is the ceiling that the note rate cannot exceed over the life of the loan.

• Amortization - a period of time in which gradual repayment of debt occurs by means of systematic payments of principle and/or interest. At the end of the time period the balance is zero.

• Principle balance: this represents the money you originally borrowed and are paying back over the life of the loan.

• Interest on loan amount.

• Real estate taxes: normally 1/12 of the most recent tax bill.

• Insurance (Home Owners): normally 1/12 of the yearly policy amount.

• Private Mortgage Insurance (PMI) - Some borrowers who have less than 20% down are required to pay PMI.

• Assessments (if any, condo, townhome, single family home) - depending on the type of dwelling, you may or may not be required to pay assessments.

• Based on our situation, what looks like the best program for us & why?

• What is the projected time for processing and closing a loan?

• Who services your loans?

• What is the projected time for processing and closing a loan?

• If PMI (Private Mortgage Insurance) is required, when and how does it go away?

• What about your rates, terms, fees, etc - are they negotiable?

• Are there any special underwriting guidelines you follow?

• What if rates go down during the “lock-in” period? 

• What do you need from us to get our loan approved?

RETURN TO HOME BUYERS TOOLBOX
 

Need to pre-qualify for a loan? Contact our sponsoring Denver Realtor - Anthony Rael at 303.520.3179 and he will be happy to place a call to one of my mortgage loan brokers who will run a quick credit check and write a pre-qualification letter for you.  There is absolutely no charge or obligation and the entire process will take less than 10 minutes of your time.