Loan Types

Let your mortgage broker or lender help you decide on the loan program that's right for you. There are literally hundreds of programs available. Below, are short explanations of the most requested loans.

Fixed Rate Loans Conventional	Interest rate and payments remain the same over the term of the loan. Normally offered for 10, 15, 20 and 30 years. This is typical of most conventional loan products.
Fixed Rate Balloon	Interest rate and payments remain the same until the loan is due, usually 5 or 7 years at which time the entire unpaid balance becomes due and payable. This is usually the lowest of the interest rates offered due to the short commitment from the lender.
Fixed Rate Roll over/Extendable	Interest rate and payments remain the same until the adjustment period, usually 5 or 7 years. The interest rate and payment is then adjusted reflecting a predetermined margin added to a current index at the time of the extension. The rollover (extension) is conditional. Normal conditions would be: 1.borrower still lives in the property. 2.borrower's payments are and have been current 3.an index hadn't risen past a predetermined ceiling. (check with your broker/lender for these and other possible conditions for extension.
Fixed to Adjustable	Interest rate and payments remain the same over a "fixed period", usually 1, 3, 5, 7, or 10 years. The interest rate and payments then fluctuate to a predetermined margin added to a current index. There is a maximum that the interest rate can fluctuate. The interest adjustment periods are usually 1, 3, 6, or 12 months
Adjustable Rate	Interest rate and payments remain the same until each of the adjustment periods, usually each 1, 3, 6 or 12 months. There is normally a maximum that the interest rate can fluctuate each period and over the life of the loan.
Adjustable Rates Negative Amortization	Interest rate and payments remain the same until each of the adjustment periods, usually 1 or 3 months. There is a maximum that the interest rate can fluctuate. It is possible to make a payment that is less than the interest due, thereby increasing the amount of the loan balance.
Graduated Payment GPM	Usually considered a "fixed rate loan" although the payment changes from an "more affordable" payment to a higher payment over the first couple years of the loan period. As the interest rate is the same throughout the loan the first years payments may not cover the actual interest owed, therefore the loan may negatively amortize causing the loan balance to increase by the negative amount.
Buy Down	This type loan is actually a variable rate loan in that the interest rate is lower the first years of the amortization period. This is done for easier qualification and more affordable payments the early years of home ownership. This differs from the GPM above in that the payments always cover the interest owed and reduce the balance. Note that there is an additional fee to "buy down" a mortgage.
No Mortgage Insurance/PMI	There are loans available without mortgage insurance, but usually at slightly higher interest rates. Additionally they typically require a 20% down payment. Exceptions would be lenders who offer portfolio loans. Possible 10%-15% down.
Multi-Family 1 to 4 Units	Loans are available for 1 to 4 unit structures.
Multi- Family Non-Owner Occupied Units	1-4 units held for investment. Rates are slightly higher for this type of property due to the higher default rate.
2nd Mortgages Equity Line of Credit Debt Consolidation Home Equity	There are 2nd trust deed (mortgages) available. They will go as far as allowing you to borrow as much as 125% of the value of your home.
No "Doc" Loans	Loans are available that require little or no proof of income. These loans are offered at a slightly higher rate and generally require 10% - 20% down payment.
Less than Perfect Credit - Sub Prime B-D Credit More on problem credit	Most lenders offer programs for less than perfect credit. The severity of the problem will dictate the rate, down payment and closing costs. There are however, programs available for almost every need and situation. Often times a high rate in the first year, will allow you to refinance in 12 months at a competitive rate as long as you have made payments on time.