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King And
I, a unique way to get Home Living
Needs!
Buying a house Loan Programs
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Fixed-Rate
Mortgages: A fixed-rate
mortgage means the interest rate and principal payments remain
the same for the entire life of the loan. (Taxes, of course, may
change.)
Advantages: Consistent principal and interest
payments make this loan stable. Your rate won’t change, so
you don’t need to worry about market fluctuations. This is a
good choice if you’re likely to stay in this house for a
long time.
Disadvantages: May cost you more — these loans are
usually priced higher than an adjustable-rate mortgage. Keep in
mind that, on average, most people move or refinance within seven
years. If rates in the current market are high, you’re
likely to get a better price with an adjustable-rate loan.
Types
of FixedMortgages-Rate:
30 Year Fixed-Rate Mortgage
20 Year Fixed-Rate Mortgage
15 Year Fixed-Rate Mortgage
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Adjustable-Rate
Mortgages: An adjustable-rate
mortgage (ARM) means that the interest rate changes over the life
of the loan — according to the terms specified in advance.
With ARMs:
The initial interest rate is usually lower than with a
fixed-rate mortgage. The monthly repayment would also be lower.
The interest rate may be adjusted (up or down) at predetermined
times. The monthly payment will then increase or decrease. Most
ARM programs do offer "rate cap" protection, which
limits the amount the rate can be increased, both each year and
over the life of the loan. All ARMs are amortized over 30 years.
Advantages: ARMs are usually priced lower than fixed-rate
mortgages so you can increase your buying power and lower your
initial monthly payments. If interest rates go down, you’ll
enjoy lower payments. Usually an ARM is the best choice for
homeowners who plan to relocate (for example, with their company
or the military), or for those who are purchasing their first
home and plan to be in the property only for three to five years.
Remember that, on average, most people move or refinance within
seven years.
Disadvantages: Your monthly payments can increase if
interest rates go up. Keep in mind that ARMs are best for
homeowners who aren't planning on staying with a property for a
long period. If you’re on a fixed income, an ARM (especially
a short-term ARM) may not be your best choice.
Types
of Adjustable-Rate Mortgages:
10/1 Adjustable-Rate Mortgage
7/1 Adjustable-Rate Mortgage
5/1 Adjustable-Rate Mortgage
3/1 Adjustable-Rate Mortgage
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Other Mortgage
Programs: 7 Year Balloon Mortgage:
With a balloon mortgage, you start by making payments as
you would with a full-term loan, but after a certain period the
balance of the mortgage comes due.
With
7 Year Balloons:
Your mortgage is amortized over the full term of the
loan repayment period. At the end of a specified period, the
balance comes due — a balloon payment needs to be made. So
with a 7 year balloon, you would make monthly payments for seven
years that have been calculated based on a 30 year mortgage
payment plan. At the end of those seven years, the remaining
principal balance is due and payable in full.
Advantages: You’ll get a lower
price on the loan, which will increase your buying power —
and remember that your payments will be calculated as if the term
were 30 years. You’ll also usually have a conditional right
to refinance after seven years, though on average most owners
will have already made a change. If you know you have a lump sum
of money on the way (such as an inheritance, bonus, or dividend
payment), if you expect to relocate in a short period of time, or
if you simply think you’ll be in a better position to
refinance later, this may be a choice worth your consideration.
Disadvantages: If you plan on keeping this property for
longer than seven years, a longer-term loan may be a stronger
choice.
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