Maria Baran HomeServicesListingsMortgage InformationFrequently Asked QuestionsHow to contact meWhy should you go with RE/MAX

Mortgage Information

Mortgage types

Mortgage rates

Mortgage terms

Overpaying ???


Best viewed with
Netscape Navigator
Mortgage Types
space.gif (814 bytes) space.gif (814 bytes) space.gif (814 bytes) Fixed Rate Mortgage
Adjustable Rate Mortgage
Balloon Mortgage
FHA Loan
VA Mortgage
Pre-approved Mortgage
space.gif (814 bytes) space.gif (814 bytes) space.gif (814 bytes) space.gif (814 bytes)
space.gif (814 bytes) space.gif (814 bytes) space.gif (814 bytes) space.gif (814 bytes)

The type of mortgage you choose will depend on several factors including how long you plan to live in your new home. Your lender should help you choose the best loan for your particular circumstances. To give you a head start here are some variations of the most popular Fixed Rate Mortgage.

A Fixed Rate Mortgage is the choice of home buyers who wants to know exactly what their payment will be month after month for the life of the loan. Principle and interest payments remain exactly the same across the life of the mortgage, which usually is 30 years, but can also be 10, 15, 20, or even 40 years. However, if you lock into a higher interest rate, the rate will not change, even if interest rates go down in the future.

Adjustable-rate Mortgage (ARM) is a mortgage in which the interest rate changes periodically according to a fixed index, such as the one-year Treasury Bill rate or the cost of funds for an area. The rate can go up only a certain amount in any given year, usually 1-2 percent. Typically there is an interest rate cap, which limits how much of a raise you can get over the total life of the loan. In exchange for this you get an initial rate that is lower than fixed-rate loans. The lower initial rate makes it easier to qualify, because the initial monthly payments are smaller. And you can qualify for a larger loan. ARMs are attractive to home buyers who anticipate an increase in income or know they'll be staying in a house only a few years.

One way of shortening the length of your loan is to take a balloon mortgage. It works and acts like fixed-rate mortgage for the first several years, usually five or seven. Then you must either refinance or repay the remaining balance. The advantage of this type loan is lower initial rate (lower monthly payments). It is recommended for buyers who plan to sell their house after a few years.

If you don't have the typical 10 to 20 percent down payment, you may still qualify for a government insured loan backed by the Federal Housing Administration. FHA Loans are issued by FHA-approved lenders. The FHA insures its loans so borrowers can get them with only a three to five percent down payment. Maximum loans are set by the FHA on a country-by-country basis to allow for differences in area housing prices.

Loans for veterans, also known as VA Mortgages are guaranteed by the Department of Veterans Affairs for honorably discharged veterans. Current guidelines allow veterans to borrow up to $184,000 with no down payment.

Many lenders also offer pre-approved mortgages based on your credit report, income and deposit verifications. Once you gain pre-approval, you can begin house hunt knowing that you have a mortgage. For final processing, you need to submit the written sales contract and have the property appraised.

I hope this short course helped you get a little more familiar with different loan types. If you have any questions please do not hesitate to give me a call at (630) 810-1900 or page me at (312) 562-6353. Or just send me an e-mail and I will get back to you ASAP.

Web Design By
Web Design by Radek
Copyright (c) 1997-01
By Maria Baran
space.gif (814 bytes)
Maria Baran is a licensed Broker with RE/MAX Elite,
7339 S. Cass, Darien, IL 60561
Phone: (630) 810-1900     Fax: (630) 810-1967
REALTORŪ is a Registered Trademark of the National Association of Realtors.