FIRST TIME HOME BUYER
If you are a first time home buyer, don't be intimidated. You have questions, we have the experience to answer them and the patience to guide you through the process with personalized attention from application to closing. Download our Preparing for Your Mortgage document here to learn more of what items you will need to start collecting to simplify the process.
FIXED-RATE vs ADJUSTABLE-RATE MORTGAGES
FIXED RATE MORTGAGE
Fixed-rate mortgage are the most conservative loan option where principal and interest portion of the monthly payment never changes. Repayment terms can range from 10 to 30 years.
Also known as ARMs, if explained properly and used with a careful plan, are a great way to minimize monthly payments and maximize returns on investment. ARMs also have an interest-only option where you only have to pay your interest, and therefore lowering your monthly payment.
UNDERSTANDING ADJUSTABLE-RATE MORTGAGES (ARMs)
These loans are usually referred to as 3/1, 5/1, 7/1, and 10/1 ARMs
The first numbers above (3, 5, 7, and 10) represent the number of years your loan will be "fixed”, where your interest rate and payment will NOT change.
The second number, ( 1 ) signifies that after the "fixed” time period, your mortgage rate can be adjusted upward or downward ONE time every year. In the case of "5/1”, after the fifth year, your mortgage rate can be adjusted one time every year.
At the end of the "fixed” period, your interest rate is determined by your index and margin clearly noted in your mortgage or note.
Adjustable Rate Mortgages generally have lower initial fixed interest rates than your conventional fixed rate mortgages.
LOWER DOWNPAYMENT, FHA AND VA LOANS
LOW DOWNPAYMENT PROGRAMS - CONVENTIONAL LOAN
The typical minimum downpayment for a conventional loan is 5 percent. There are certain special programs that with particular criteria, will work with a 3% down payment any time there is less than a 20% equity/down payment position, mortgage insurance will be required.
The minimum downpayment for a FHA purchase loan is 3.5 percent. Generally speaking, FHA Loan guidelines are a bit more lenient than that of conventional loans. For example, the funds needed for the down payment and closing costs can be gifted from a family member to the borrower.
First of all, thank you for your service! The Department of Veterans Affairs (VA) loans provide both fixed and adjustable-rate loans for veterans an other borrows who meet the eligibility requirements of the program. Call us directly for more details.
Offer low and no-downpayment options and do not require monthly mortgage insurance.
Closing cost could come from gift or grant.
Requires a one-time VA funding fee that can be finance into the loan or paid cash at closing.
VA financing is available only on your primary residence.