Listed below are general explanations of different loans. For
additional explanations please contact a lender.
ADJUSTABLE RATE MORTGAGE: Mortgage loans under
which the interest rate is periodically adjusted to more closely
coincide with current rates. The amount and times are agreed to
at the inception of the loan. Generally, the rate will be fixed
at a low rate for the first several years.
BALLOON PAYMENT LOAN: A loan that is typically
amortized over 30 years, but is due and payable at the end of
a certain term. May be extended or rolled over to a different
loan. EXAMPLE: 30 years due in 5 years.
BUYDOWN LOAN: Loan that has a reduced rate and
payment for a specific period of time. This is done by paying
interest up front.
COMMUNITY HOMEBUYER’S PROGRAM: A first
time buyer program with a fixed rate and low down payment, commonly
3-5%. There are no cash reserve requirements and qualifying ratios
are easier. Loan is subject to buyer meeting all income standards
and completing a four-hour training course.
CONVENTIONAL LOAN: A mortgage not obtained under
government insured program, secured by investors.
FHA LOAN: Loans insured by the Federal Housing
Administration under H.U.D. They offer low down payments and easier
qualifying.
FIXED RATE LOAN: A loan with one interest rate
that remains constant through the life of the loan.
GRADUATED PAYMENT MORTGAGE: A loan that starts
payments lower than standard fixed rate loans, and increases the
payment by a predetermined amount each year.
NON-QUALIFYING LOAN: A loan that may be taken
over from the seller by the buyer. The buyer would pay the seller
for his/her equity and assume the payments, avoiding qualification.
These loans are complicated and rare. Please contact your lender
with any questions.
VA LOAN: A loan that can be up to 100% of the
purchase price, secured by the government for people who have
served in the armed forces. Customarily, the buyer pays no costs
of the purchase. The extra fees that the seller has to pay are
usually added on to the sales price.
INTEREST ONLY LOAN: A loan where the payment
covers only the interest due. Generally, this will be an adjustable
rate mortgage.
