Using our Lender.
Deciding which Mortgage Program works best for you.
A Mortgage Is More Than An Interest Rate
But the most important features to consider are the types and the terms of mortgage,
such as whether it is adjustable, fixed or a sort of the two, and what the length
of the term is, i.e., 1, 3, 7, 15 or 30 years.
Other Mortgage Types
A "Builder/Lender BuyDown" gives the home buyer an initially discounted interest rate which gradually increases to an agreedupon fixed rate over a certain period of time.
"Convertible" mortgages offer the option to change the mortgage type after a specified period of time. This allows you to begin with a lower mortgage rate, then to "catch up" to your future higher income with a higher rate later.
15Year Versus 30Year Mortgages
Which mortgage is best for you?
Annual Percentage Rate (APR): An interest
rate reflecting the cost of a mortgage at a yearly rate.
Balloon Mortgage: A type of mortgage usually used for a shortterm, fixedrate loan which involves small payments for a set period of time and one large payment for the remaining amount at a time specified in the contract.
Buy Down: A mortgage in which the seller and/or home builder subsidizes the mortgage by lowering interest rates during the first few years. Payments may increase when the subsidy expires.
Caps: Usually found on adjustable rate
mortgages, these limit the amount that the interest can rise.
Escrow: A neutral third party who carries out the instructions of both the buyer and the seller to handle all the paperwork of closing. Escrow may also refer to an account held by the lender into which the home buyer pays money for tax or insurance reasons.
FHA Loan: A loan that is insured by the Federal Housing Administration and is open to all qualified home purchasers.
Origination Fee: Fee charged by a lender to prepare loan documents, make credit checks, inspect and sometimes appraise a property; usually computed as a percentage of the loan.
PITI: Principal, interest, taxes and insurance. Also called monthly housing expense.
Points: Prepaid interest assessed at closing by the lender. Each point is equal to 1% of the loan amount.
Principal: The part of your mortgage payment that directly pays off your loan. This does not include the interest, taxes or insurance that may be a part of your loan payment.
Title: Document which gives evidence of ownership.
Refinancing: Is simply taking out a new mortgage to pay off the old one. You may wish to do so if rates drop significantly, or if you want to change the terms of your mortgage.
VA Loan: Longterm, low or nodown
payment loan guaranteed by the Department of Veterans Affairs. Restricted to
individuals qualified by military service or other entitlements.
Here's how to use it:
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