mortgages

Loan Programs
The decision of whether to use an FHA loan or a Conventional loan can sometimes become difficult. Here are a few benefits and drawbacks to keep in mind:

FHA CONVENTIONAL
Minimum 3.5% down Minimum 5% Down
Gift is allowed 5% must be borrower's own money
Mortgage Insurance (MI) always available MI is a third party that must also
approve the loan
No Reserves required Minimum of 2-6 months Reserves
Relax credit qualification Must have excellent credit to get
the lowest rate
UFMIP or FHA Funding Fee charge None
2 years out of bankruptcy 7 years out of bankruptcy
3 years out of Foreclosure 5 years out of Foreclosure
30, 25, 20, 15, 10 Year Fixed 30, 25, 20, 15, 10 Year Fixed
3, 5, 7, 10 Year ARM 3, 5, 7, 10 Year ARM

At Pacific One, we educate our borrowers and always give them their options that will help them choose the best suitable loan program in what they are trying to do.

To Help Determine The Best Loan Program For You, Consider The Following:

  • How important is payment certainty? If knowing that your payment will be the same every month is important, consider a fixed-rate mortgage.
  • How important is rapid equity buildup? If rapid equity buildup is a factor, consider a shorter amortization period, such as a 15-year fixed-rate mortgage.
  • Do you anticipate increasing or stable income? If income growth is anticipated, you could take advantage of a lower start rate on an ARM or a temporary buydown.

Other factors to consider include:

  • Ability to qualify at market rates for loan amount selected
  • Anticipated term of occupancy
  • Possibility of significant rate changes
  • Existence of up-front costs

There are many Loan programs available in the market. However, we've highlighted the programs most commonly offered today.Characteristics of each loan program are unique, so consult with us for more information and to become familiar with the details of the programs available to you.

Loan Programs

Characteristics

15 and 30 Year Fixed-Rate Mortgages

  • Interest rate does not change.
  • Principal and interest (P & I) does not change.
  • Fixed-rate mortgages fully amortize over a defined period of time and are paid in-full at the end of the loan term.
  • Different loan terms are available (15 and 30 Year terms are most popular).
  • The shorter the term, the faster equity is built and the loan is paid off.

Fixed-Rate Balloons

  • P & I payment and interest rate do not change.
  • Regular monthly P & I payments are based on 30-year amortization, while the unpaid balance (balloon) is due at the end of a shorter, predetermined term, typically 5, 7 or 10 years.
  • Interest rate is typically less than fixed-rate loans.
  • Most borrowers anticipate refinancing or selling prior to the end of the balloon term.

Fixed-Rate with Temporary Buydown

  • Borrowers or the seller may pay to temporarily "buy down," or lower, the interest rate.
  • Decreased interest rate reduces the monthly payment.
  • Lower interest rate may help borrowers qualify more easily; qualifying factors may vary.
  • Interest rate/payment is typically reduced for 1, 2 or 3 years

Interest-Only Mortgages

  • There are no reductions to the principal amount.
  • There is no provision for negative amortization.
  • Payments may increase up to an amortized amount, but the loan balance itself does not increase.
  • Generally, interest-only payments are limited to the first 5, 10 or 15 years of the loan.
  • After that, the loan is amortized for the remainder of its term.

Adjustable-Rate Mortgages (ARMs)

  • There is potential for the interest rate/ payment to fluctuate.
  • ARMs transfer to borrowers a portion of the risk associated with a changing economy.
  • In exchange for sharing the risk, ARMs offer borrowers initial interest rates that are substantially lower than fixed-rate mortgages.
  • The lower interest rate may help borrowers qualify more easily; qualifying factors may vary.

pacific one
Copyrighted 2012 Chris Zabat Pacific One Mortgage, Inc.  /   All Rights Reserved.  /  Website design by Boojazz Studios