Loan Programs

Choosing The Best Program

The right type of mortgage for you depends on many different factors

There isn’t a single or simple answer to this question. The right type of mortgage for you depends on many different factors:

  • Your current financial picture.
  • How you expect your finances to change.
  • How long you intend to keep your house.
  • How comfortable you are with your mortgage payment changing.

For example, a 15-year fixed-rate mortgage can save you many thousands of dollars in interest payments over the life of the loan, but your monthly payments will be higher. An adjustable rate mortgage may get you started with a lower monthly payment than a fixed-rate mortgage — but your payments could get higher when the interest rate changes.

The best way to find the “right” answer is to discuss your finances, your plans and financial prospects, and your preferences frankly with a mortgage professional.


Fixed Rate Mortgages

The most common type of mortgage program where your monthly payments for interest and principal never change.

Adjustable Rate Mortgages (ARM)

These loans begin with an interest rate that is lower than a comparable fixed rate mortgage, but the rate changes at specified intervals.

Standard ARMS and the Differences

Choosing an ARM with an index that reacts quickly lets you take full advantage of falling interest rates.

Introductory Rate ARM’s

Most ARM’s have a low introductory rate, which is good anywhere from 1 month to as long as 10 years.

Reverse Mortgages

A Special type of loan made to older homeowners (typically 62 +) to enable them to convert the equity in their home to cash to finance other needs.

London Inter Bank Offered Rate (LIBOR)

LIBOR is the rate on dollar-denominated deposits, also know as Eurodollars, traded between banks in London.

Cost of Funds Index (COFI)

The ratio of the dollar amount paid in interest during the month to the average dollar amount of the funds for that month constitutes the weighted average cost of funds ratio for that month.

Interest Rate Buydowns

The buyer would pay points above current market points in order to pay a below market interest rate during the first two years of the loan. At the end of the two years they would then pay the old market rate for the remaining term.

Balloon Mortgages

Short term mortgages that have some features of a fixed rate mortgage.

Graduated Payment Mortgage (GPM)

With a GPM the payments are usually fixed for one year at a time.