|
|
Loan ProgramCheck out Overlake Mortgage Company for the best loan programs in today's interest rate environment.Adjustable Rate Mortgage (ARM) - A general term for a mortgage with fluctuating interest rates and fluctuating payments. The frequency and amount of fluctuation depends on the type of Adjustable Rate Mortgage. 1 Year T-Bill ARM - The most common Adjustable Rate Mortgage, where the interest rate and payment changes once per year. The index is based on the yield for 1 Year Treasury Bills, and the rate charged is determined by adding the margin to the index. Your payment is recalculated every year based on the new rate and the number of years left on your mortgage. 3/1, 5/1 or 7/1 ARM - Similar to the 1 Year T-Bill, with the difference being the initial interest rate and payment are guaranteed for either 3, 5, or 7 years, after which the interest rate and payment change once per year. COFI ARM - An Adjustable Rate Mortgage tied to the 11th District Cost of Funds Index (COFI). Depending on the type of COFI ARM, the initial interest rate may be guaranteed for as little as 3 months to as long as 6 months. After the guarantee period, the interest rate may change as often as monthly. With some COFI ARMS, the payment and interest rate work independently of each other. For a more detailed description of COFI ARMs. 30 Year Fixed - The most common type of mortgage loan, where you pay a fixed rate of interest over the entire 30 year period. Your interest rate never changes, and your principal and interest payment never changes. 15 Year Fixed - Similar to the 30 Year Fixed in that your interest rate never changes, and your principal and interest payment never changes. In order to pay off your loan in half the time, however, your required minimum monthly payment is roughly 20% higher than for a 30 year fixed mortgage. 7/23 Fixed - The interest rate and payment for the first 7 years are fixed, then the interest rate and payment change once and remain fixed for final 23 years. The new rate is based on a predetermined formula, and is a function of current interest rates at the time of the rate change. 5/25 Fixed - Similar to the 7/23 Fixed, with the exception being the initial interest rate is fixed for a shorter period of time. Due to the shorter initial fixed period, the start rate on a 5/25 is usually lower than that for a 7/23. 7 Year Balloon - Similar to the 7/23 in that your initial interest rate and payment remain fixed during the first 7 years. However, unlike the 7/23 where your rate and payment adjust automatically after 7 years based on a predetermined formula, with the 7 Year Balloon you must reapply for a new mortgage at the end of 7 years. This loan is good for people who want a fixed rate and who either do not expect to be in their home after 7 years or who are not concerned with having to requalify. 5
Year Balloon - Similar to the 7 Year Balloon, with the exception
being the initial interest rate is fixed for a shorter period
of time. Due to the shorter period, the interest rate on a 5
Year Balloon is usually lower than that for a 5 Year Balloon.
|
