Mortgage Payment Pick

Getting a mortgage loan is probably the largest financial commitment you will ever have to make. There are many industry terms used in the marketplace today and it is important that you are armed with the knowledge to get the mortgage that is right for you.

We have prepared a free special report entitled, "Mortgage Payment Picks and Adjustable Rate Mortgages", specifically designed to teach borrowers this industry-changing lending option.

The Pick-A-Payment ARM lets you choose the monthly loan payments that fit your finances — and puts you in control of your cash flow.

How does it work?

Every month,  you have four payment options;  Example $200,000 30 Year Fixed

1. Minimum Payment (amount pre-defined by borrower).   $689
2. Interest-Only Payment (no reduction in principal). $883       
3. 30 year Payment (fully -indexed rate). $1,106
4. 15 year Payment (accelerated amortization). $1,606

Current first year interest rates are less than 2%

This loan has a fixed rate with a term of 30 years.  The payments do not change over the life of the loan. The amount of interest paid is the highest at the beginning of the loan than towards the end of the term.  Typically any amount paid over the principle and interest payment is applied directly to principle reduction. These term generally apply for 10, 15, 20 and 25 year fixed rate loans as well.

The 3/1 ARM mortgage is a 3-year level payment program that guarantees the payments for the first 3 years and then it becomes ARM for the remaining 27 years. The interest rate upon renewal is determined by an index out of the lender's control and may not be increased by more than 6% in interest. The prime advantage to the borrower is that the lender can offer a fixed rate level mortgage payment at interest rates .1% -1 .50% below 30 year fixed rate mortgages. This is because the lender is only locking in the interest rate for 3 years, rather than 30 years under the traditional 30-year fixed rate mortgage. The one disadvantage is the borrower may have to pay substantially higher interest rates and payments after the first 3 years, if interest rates go up over the first 3 years.

The 5/1 ARM mortgage is a 5-year level payment program that guarantees the payments for the first 5 years and then it becomes a 1-year ARM for the remaining 25 years. The interest rate upon renewal is determined by an index out of the lender's control and may not be increased by more than 5% in interest. The prime advantage to the borrower is that the lender can offer a fixed rate level mortgage payment at interest rates .25% - .50% below 30 year fixed rate mortgages. This is because the lender is only locking in the interest rate for 5 years, rather than 30 years under the traditional 30-year fixed rate mortgage. The one disadvantage is the borrower may have to pay substantially higher interest rates and payments after the first 5 years, if interest rates go up over the first 5 years.

The 7/23 mortgage is a 7-year level payment ARM that guarantees the payments for the first 7 years and then it becomes a fixed rate mortgage for the remaining 23 years. The interest rate upon renewal is determined by an index out of the lender's control and may not be increased by more than 6% payment at interest rates .25% - .50% below 30-year fixed rate mortgages. This is because the lender is only locking in the interest rates for 7 years, rather than 30 years under the traditional 30-year fixed rate mortgage. The one disadvantage is the borrower may have to pay substantially higher interest rates and payments after the first 7 years, if the interest rates go up over the first 7 years.

Loans in excess of  FNMA/FHLMC limits ($333,700) are called Jumbo loans and often carry higher interest rates and points. Larger down payments may also be required on these loans

FHA loans have a lower down payment requirement than conventional loans, but higher than VA loans. FHA has a more liberal qualifying formula than on conventional loans but not as liberal as VA loans. FHA loans made before December 15, 1989 are fully assumable and can be creatively financed. Loans made after December 15, 1989 can be assumed at the same interest rate with qualification. FHA is more lenient on properties that are older or are located in undesirable neighborhoods. Disadvantages - $155,250 county loan limits may be inadequate in high cost areas. Appraisals may contain more repair requirements than conventional loans.

The VA loan program for owner-occupied housing is one of the best loan programs in the free world. It is possible for a veteran to obtain 100% loans up to $203,000 with absolutely no down payment and the seller or builder is allowed to pay all of the veteran closing costs, making the total cash required to purchase, in some instances, zero. If the veteran desires higher priced homes, he generally is required to make a down payment on the amount over $203,000. Generally, the Veterans Administration is a little more liberal than conventional lenders would be with regard to the veteran's credit standing and qualifying for the VA loan, although recent VA underwriting changes make the qualifying criteria similar to conventional mortgages.

Borrower pays back interest only on the loan and there is no amortization until later or until the end of the term. This may occur when a purchaser wishes to resell property after a short period or if he wishes to build up enough income from the property before amortization.  Interest only loans are attractive to some borrowers because the monthly payment is calculated by taking the interest paid divided by the months, for example a $200,000 loan at 4.5% interest only equals a payment of $750.

Please feel free to reach me at any of the following sources:

972-436-8720 metro

866-711-9400 toll free

 214-663-9787 cell

940-725-0250 home

Evening and weekend appointments are gladly accepted

keith@metroplexhomemortgage.com

Texas License # 16014 

Hours of Operation are M-F 8 a.m. to 6 p.m.