A fixed rate mortgage amortizes over a fixed period of time, typically between 10 and 30 years and maintains the same interest rate for the entire duration.  Both interest and principal is repaid each month, so that at the end of the mortgage length there will be no mortgage balance.

An adjustable rate mortgage, or ARM, allows you will have a lower initial interest rate as compared to a fixed rate mortgage.  A lower rate is helpful in qualifying for a home today, knowing that your income will likely increase in the future or because you don’t plan to own the home long term.  The ARM interest rates are fixed for periods as short as 1 month to 6 months to 1, 3, 5, 7, and 10 years.  After the fixed interest period, the rate can adjust by as much as 5% in the first adjustment and 2% in any future adjustments and then capped at 6% over the initial rate.  The ARMs adjust according to an index, like LIBOR or T-Bill, with a margin added to it.

Interest Only options exist for both fixed rate and adjustable rate mortgages.  They allow the borrower to “skip” principal repayment for a period of time up to 10 years.  The loan then becomes an accelerated amortization over the remaining number of years.

Home equity lines of credit are used by our clients to avoid paying mortgage insurance (in the case of not having 20% to put down as a down payment) or to lower the first loan amount down to the conforming limit on loans (in order to pay a lower interest rate).  Home equity interest rates are adjustable, so we discuss the pros and cons of them with you.

One of our company’s specialties is Renovation loans.  Sometimes your home is not “marketable” or is “functionally obsolescent” to Freddie Mac or Fannie Mae.  Sometimes you want to renovate, expand or even tear down and reconstruct your home.  Interest rates for renovation products generally are at the same great rate as traditional mortgages provide.  Call us to discuss your project.

We are the only local lender with local residents providing reverse mortgages.  If you are 62 or older and your home is paid off or has a low mortgage balance, you may be a candidate for a reverse mortgage.  Your income, assets (other than your home’s value) and credit (other than being delinquent or in foreclosure on your mortgage or in personal bankruptcy) are not relevant for qualification.  Additionally, you are never required to repay your loan while you continue to live in your home.  Conversely, you actually receive monies while you live in your home.

The options for payment to you include lump sum, equity line draws, term fixed payments, unlimited time fixed payments and sometimes you are eligible for a combination of two or more. 

Since this is equity in the home you own, the payments are NOT considered income to the Federal government.  You may use the proceeds in any way you wish, including paying bills, taking trips, providing gifts to family members or even estate planning.

While this type of loan may fit your situation, we analyze whether a traditional mortgage would be a better option as well as discussing the situation (with your consent) with your financial advisor(s) as well as your family.  You will never owe more than your home is worth and the lender does not have the title to the property – you do.  Finally, these loans are generally federally backed.  Our company represents FHA, through the HECM, which stands for Home Equity Conversion Mortgage; Fannie Mae, through the HomeKeepers; and finally a proprietary product that Financial Freedom offers through Indy Mac that allows you to exceed the loan limits that FHA and Fannie Mae cap in order to borrow a greater amount.