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Mortgage Loan Programs |
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There are various loan
programs and individual products to meet virtually any residential
lending requirement and goal. We take pride in understanding our
client's situation and matching them with the specific product to best
suit their individual needs. The following is a list of the various
mortgage loan programs and types.
Fixed Rate Mortgage - A loan that which the interest
rate that does not change during the life of your loan. Typically
fixed-rate loans are either 15 or 30 year terms. There are also
products available in 10, 20, 25, and now 40 year terms as well. If you
plan to live or own the home for more than 10 years OR you want a
consistent monthly payment, a fixed-rate mortgage would be your best
choice considering typical financial goals.
Adjustable Rate Mortgage (ARM) - A loan with a
variable interest rate that can adjust periodically throughout the life
of the loan based on changing market conditions. Adjustable rate
mortgages are typically 30 year amortization term and carry an initial
fixed period followed by an adjustable period. The fixed period may
last anywhere from one month to ten years and can adjust at various
intervals (monthly, every six months, yearly) based on the details of
the loan program.
Once the fixed rate period is completed the loan will adjust to the
total of the margin (fixed rate) and the index (an adjustable rate) to
determine the 'fully indexed' rate. The index is based on a major
mortgage index such as as LIBOR, T-bill, COFI, or MTA and can vary from
month to month. Advertised adjustable rate mortgage programs may be
3/27 or 5/25 (amongst many others). The first number is the duration of
the fixed rate period followed by remaining adjustable term.
Jumbo Mortgage Loan - A single loan over the current
conforming limit, which is $417,000 in the United States. This means
jumbo loans are non-conforming and are not backed by FNMA (Fannie Mae)
or FHLMC (Freddie Mac) who are agencies that purchase the bulk of
residential mortgages in the United States.
Jumbo loans have a higher risk factor and therefore a slightly higher
interest rate than conforming mortgage loans. This is due to the fact
there are fewer available investors to purchase the higher value loans.
Additionally, they typically are for luxury residences which can be
tougher to sell and more susceptible to valuation drops than
conventional homes in market declines. Most of the lending programs
available for conventional loans are available for jumbo loans.
Interest Only - is a loan that for a set term the
borrower only pays the interest on the principle balance. The principle
balance does not change. Upon the conclusion of the interest only term,
typically five or ten years, the loan will convert to a fully
amortizing loan where principal and interest are paid.
Interest only options are standard on almost any mortgage loans
program. This can be a adjustable-rate mortgage (ARM) with the interest
only option or a 30 year fixed rate with interest only payment option.
Interest only loans usually have a slightly higher rate hit.
Full Document Loan - or "Full Doc" is where all income
assets and documents are documented in the underwriting process. These
documents include income verification, asset verification, debt
information, and purchase information.
No Document Loan - does not require income, asset, or
employment verification. The borrower essentially qualifies for this
loan with a credit report with score higher than that of traditional
loans. This loan is a great option for someone who is self-employed.
Stated Income Loan - or No Income Verification (NIV)
loans are for borrowers who cannot easily provide traditional mortgage
documentation to verify their income. This can be for those who are
self-employed, have multiple sources of income, or various other
reasons that may be unrealistic to provide documents required to verify
earnings. Borrowers will still be required to verify two years of
employment and assets as with other loans. Most of the time they will
have higher credit score requirements to qualify versus the standard
full document loan. Rates on stated income loans are usually slightly
higher than full document loans but still very competitive and
attractive.
First Time Home Buyer Loan - offered by various
lenders designed to help first time home buyers purchase their first
home. They have reduced down payment requirements, reduced closing
costs, flexible qualifying guidelines, and various other options suited
to the first time home buyer. Along with the benefits these loans have
restrictions on property types, values, and other requirements.
No Income/No Asset (NINA) Loan - is another type of
loan program in which the lender does not require income or asset
verification as part o the underwriting process. Loan approval is based
on credit history, down payment, and preperty value. The borrower may
also be required to verify they have a source of income based on their
status of either self-employed, state-wage earners, or fixed income.
Reverse Mortgage - is a loan available in the
United States to seniors age 62 and above. It allows the homeowner to
take cash out of their home using existing equity and without taking on
a monthly payment or selling the home. In order to qualify the borrower
must be at least 62 and pay off any existing mortgage with the reverse
mortgage proceeds. The type of property may be a consideration. There
are no minimum income or credit requirements and the money can
typically be used for any purpose. Once the loan is paid off the
interest is tax deductible.
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copyright © 2007 Excel Home Lending Corp
