My Loan Types
Loan Products
There are many loan options available, each one distinctive from the next. Options Financial Residential Mortgage will work with you to determine your most successful loan type by helping you determine your individual goals regarding homeownership.
Loan Term
Your loan term refers to the length of time that the loan will exist. The requirements and restrictions on loan terms differ depending upon your loan product. *Common loans terms range from 3, 5, 7, 10, 15, 20, 25, or 30-years.
Loan Types
There are two types of loans you can choose from based on your short and long-term goals:
• Fixed-rate mortgage loan
• Adjustable-rate mortgage loan
A fixed-rate mortgage loan is generally a great option if you are planning to stay in your home for a long period of time. This type of loan has a fixed monthly payment and interest rate that will never fluctuate during your loan term.
An adjustable-rate mortgage loan works well for short-term housing commitments. During the first years of your loan term, you will have a very low fixed monthly payment with a fixed monthly interest rate. After the conclusion of your fixed payment period, your principal payment will not change; however, your interest rate will increase based on current housing market conditions. This will result in a payment that will fluctuate.
Options Financial Residential Mortgage is committed to providing our clients with options that are tailored to meet their needs. We are here to support you in your efforts toward successfully owning real estate
Who makes the rules for the lending decision?
The rules of your lending decision will be made by the organization that funds your specific loan product. There are privately owned as well as government-owned organizations that provide insurance to the lending institutions that issue loans to home buyers.
Freddie Mac and Fannie Mae are two primary sources of money for lending institutions. Both organizations are privately owned. Since they purchase a bulk of the loans that are approved for home buyers, they set many of the rules and guidelines for a lending decision.
The VA, FHA, and USDA are all federal insurers of specific loan programs. All of these organizations are government run. They have the power to establish lending rules and guidelines because they ensure lending institutions against future potential losses if a homeowner goes through a foreclosure.
Will I need mortgage insurance?
Mortgage insurance guarantees that a lender will not suffer from a loss if a borrower defaults on their loan. As a general rule, if you pay less than 20 percent down, or refinance more than 80 percent of the value of your home, you will need mortgage insurance. Mortgage insurance will differ depending upon your unique situation.
How do I know which loan type is appropriate for me?
When choosing a loan type, there will always be a trade-off between cost and value, risk and gain. The key is not finding the perfect loan type, but rather combining expert knowledge with your personal preferences to strategically choose the loan that works for your unique scenario.
Every individual looking to buy a home has a unique financial fingerprint. To successfully learn which loan combination is appropriate for you, we invite you to work with one of our trusted Loan Officers. These trained advisors can empower you with accurate knowledge – aligning your needs with who you are and where you are going.
