(909) 477-1515
Carmen Gutierrez
"Feels good to be
a homeowner!"
Excitement of
Single-Parent Mom
Buying First Home
"It’s a blessing from God for us to
have this home."
"It just felt like
our home."
Happy soldier waves
keys to new home!
"We love it! Don’t have
to change a thing."
First-Time
Home Buyers
Needed Expert Help
Grateful First-Time
home buyers
Happy Investor
Fixer-Upper Joy
"Sold in 3 weeks!"
"You need somebody
who’s going to be
there for you."
"Our real estate
dreams came true."
"We’re moving in today!"
Internet home buyers
bought USA home
while in Japan!
"We found
the perfect home."

Fixed Rate Mortgages

The traditional fixed rate mortgage is the most common type of loan program, where monthly principal and interest payments never change during the life of the loan. Fixed rate mortgages are available in terms ranging from 10 to 30 years and can be paid off at any time without penalty. This type of mortgage is structured, or "amortized" so that it will be completely paid off by the end of the loan term. There are also "bi-weekly" mortgages, which shorten the loan by calling for half the monthly payment every two weeks. (Since there are 52 weeks in a year, you make 26 payments, or 13 "months" worth, every year.)

Even though you have a fixed rate mortgage, your monthly payment may vary if you have an "impound account". In addition to the monthly loan payment, some lenders collect additional money each month (from folks who put less than 20% cash down when purchasing their home) for the prorated monthly cost of property taxes and homeowners insurance. The extra money is put in an impound account by the lender who uses it to pay the borrowers' property taxes and homeowners insurance premium when they are due. If either the property tax or the insurance happens to change, the borrower's monthly payment will be adjusted accordingly. However, the overall payments in a fixed rate mortgage are very stable and predictable.

Adjustable Rate Mortgages (ARM)

Adjustable Rate Mortgages (ARM)s are loans whose interest rate can vary during the loan's term. These loans usually have a fixed interest rate for an initial period of time and then can adjust based on current market conditions. The initial rate on an ARM is lower than on a fixed rate mortgage which allows you to afford and hence purchase a more expensive home. Adjustable rate mortgages are usually amortized over a period of 30 years with the initial rate being fixed for anywhere from 1 month to 10 years. All ARM loans have a "margin" plus an "index." Margins on loans range from 1.75% to 3.5% depending on the index and the amount financed in relation to the property value. The index is the financial instrument that the ARM loan is tied to such as: 1-Year Treasury Security, LIBOR (London Interbank Offered Rate), Prime, 6-Month Certificate of Deposit (CD) and the 11th District Cost of Funds (COFI).

When the time comes for the ARM to adjust, the margin will be added to the index and typically rounded to the nearest 1/8 of one percent to arrive at the new interest rate. That rate will then be fixed for the next adjustment period. This adjustment can occur every year, but there are factors limiting how much the rates can adjust. These factors are called "caps". Suppose you had a "3/1 ARM" with an initial cap of 2%, a lifetime cap of 6%, and initial interest rate of 6.25%. The highest rate you could have in the fourth year would be 8.25%, and the highest rate you could have during the life of the loan would be 12.25%.

Some ARM loans have a conversion feature that would allow you to convert the loan from an adjustable rate to a fixed rate. There is a minimal charge to convert; however, the conversion rate is usually slightly higher than the market rate that the lender could provide you at that time by refinancing.
 
 
Hybrid ARMs (3/1 ARM, 5/1 ARM, 7/1 ARM, 10/1 ARM
 
Hybrid ARM mortgages, also called fixed-period ARMs, combine features of both fixed-rate and adjustable-rate mortgages. A hybrid loan starts out with an interest rate that is fixed for a period of years (usually 3, 5, 7 or 10). Then, the loan converts to an ARM for a set number of years. An example would be a 30-year hybrid with a fixed rate for seven years and an adjustable rate for 23 years.

The beauty of a fixed-period ARM is that the initial interest rate for the fixed period of the loan is lower than the rate would be on a mortgage that's fixed for 30 years, sometimes significantly. Hence you can enjoy a lower rate while having period of stability for your payments. A typical one-year ARM on the other hand, goes to a new rate every year, starting 12 months after the loan is taken out. So while the starting rate on ARMs is considerably lower than on a standard mortgage, they carry the risk of future hikes.

Homeowners can get a hybrid and hope to refinance as the initial term expires. These types of loans are best for people who do not intend to live long in their homes. By getting a lower rate and lower monthly payments than with a 30- or 15-year loan, they can break even more quickly on refinancing costs, such as title insurance and the appraisal fee. Since the monthly payment will be lower, borrowers can make extra payments and pay off the loan early, saving thousands during the years they have the loan.
 
 
HARP 2.0 Refinance
 
HARP 2.0 is a refinance option for homeowners that are "underwater," meaning they owe more on their home than their home is worth.

In order to be eligible for the HARP 2.0 refinance program, you must meet certain criteria. Firstly, you must not have refinanced through the original HARP program. You need to be current on monthly mortgage payments with no late payments over 30 days due in a minimum of 6 months, and no more than one late payment in the previous 12 months. Your mortgage must be backed by Fannie Mae or Freddie Mac and must have been bought by either Fannie or Freddie before May 31st, 2009. Your loan to value (LTV%) must be at least 80%.

The purpose of HARP is to allow homeowners who owe a mortgage that is more than the value of their home a more affordable and stable mortgage.
 
 
FHA Loans
 
FHA home loans are mortgage loans that are insured against default by the Federal Housing Administration (FHA).  FHA loans are available for single family and multifamily homes. These home loans allow banks to continuously issue loans without much risk or capital requirements. The FHA doesn't issue loans or set interest rates, it just guarantees against default.

FHA loans allow individuals who may not qualify for a conventional mortgage obtain a loan, especially first time home buyers. These loans offer low minimum down payments, reasonable credit expectations, and flexible income requirements.
 
 
VA Home Loans
 
The VA Loan provides veterans with a federally guaranteed home loan which requires no down payment. This program was designed to provide housing and assistance for veterans and their families.

The Veterans Administration provides insurance to lenders in the case that you default on a loan. Because the mortgage is guaranteed, lenders will offer a lower interest rate and terms than a conventional home loan. VA home loans are available in all 50 states. A VA loan may also have reduced closing costs and no prepayment penalties.

Additionally there are services that may be offered to veterans in danger of defaulting on their loans. VA home loans are available to military personal that have either served 181 days during peacetime, 90 days during war, or a spouse of serviceman either killed or missing in action.
 
 
Interest Only Mortgages
 
A mortgage is called “Interest Only” when its monthly payment does not include the repayment of principal for a certain period of time. Interest Only loans are offered on fixed rate or adjustable rate mortgages as wells as on option ARMs. At the end of the interest only period, the loan becomes fully amortized, thus resulting in greatly increased monthly payments. The new payment will be larger than it would have been if it had been fully amortizing from the beginning. The longer the interest only period, the larger the new payment will be when the interest only period ends.

You won't build equity during the interest-only term, but it could help you close on the home you want instead of settling for the home you can afford.

Since you'll be qualified based on the interest-only payment and will likely refinance before the interest-only term expires anyway, it could be a way to effectively lease your dream home now and invest the principal portion of your payment elsewhere while realizing the tax advantages and appreciation that accompany homeownership.

As an example, if you borrow $250,000 at 6 percent, using a 30-year fixed-rate mortgage, your monthly payment would be $1,499. On the other hand, if you borrowed $250,000 at 6 percent, using a 30-year mortgage with a 5-year interest only payment plan, your monthly payment initially would be $1,250. This saves you $249 per month or $2,987 a year. However, when you reach year six, your monthly payments will jump to $1,611, or $361 more per month. Hopefully, your income will have jumped accordingly to support the higher payments or you have refinanced your loan by that time.

Mortgages with interest only payment options may save you money in the short-run, but they actually cost more over the 30-year term of the loan. However, most borrowers repay their mortgages well before the end of the full 30-year loan term.

Borrowers with sporadic incomes can benefit from interest-only mortgages. This is particularly the case if the mortgage is one that permits the borrower to pay more than interest-only. In this case, the borrower can pay interest-only during lean times and use bonuses or income spurts to pay down the principal.

 
Balloon Mortgages
 
A balloon mortgage has an interest rate that is fixed for an initial amount of time. At the end of the term, the remaining principal balance is due. At this time, the borrower has a choice to either refinance or pay off the remaining balance.

There are no penalties to paying off a balloon mortgage loan before it is due. Borrowers may refinance at any time during the life of the loan.

Balloon loans typically have either 5 or 7-year terms. For example, a 7-year balloon mortgage with an interest rate of 7.5% would feature this interest rate for the entire term. After 7 years, the remaining loan balance would become due.

 
Reverse Mortgages
 
A reverse mortgage is a type of home equity loan that allows you to convert some of the existing equity in your home into cash while you retain ownership of the property. Equity is the current cash value of a home minus the current loan balance.
 
A reverse mortgage works much like a traditional mortgage, except in reverse. Instead of the homeowner paying the lender each month, the lender pays the homeowner. As long as the homeowner continues to live in the home, no repayment of principal, interest, or servicing fees are required. The funds received from a reverse mortgage may be used for anything, including housing expenses, taxes, insurance, fuel or maintenance costs.

To qualify for a reverse mortgage, you must own your home. You may choose to receive the reverse mortgage funds in a lump sum, monthly advances, as a line-of-credit, or a combination of the three, depending on the reverse mortgage type and the lender. The amount of money you are eligible to borrow depends on your age, the amount of equity in your home, and the interest rate set by the lender.

Because the borrower retains ownership of the home with a reverse mortgage, the borrower also continues to be responsible for taxes, repairs and maintenance.

Depending on the plan selected, a reverse mortgage is due with interest either when the homeowner permanently moves, sells the home, dies, or the end of a pre-selected loan term is reached. If the homeowner dies, the lender does not take ownership of the home. Instead, the heirs must pay off the loan, typically by refinancing the loan into a forward mortgage (if the heirs meet eligibility requirements) or by using the proceeds generated by the sale of the home.
 
 
Graduated Payment Mortgages
 
A graduated payment mortgage is a loan where the payment increases each year for a predetermined amount of time (such as 5 or 10 years), then becomes fixed for the remaining duration of the loan.
 
When interest rates are high, borrowers can use a graduated payment mortgage to increase their chances of qualifying for the loan because the initial payment is less. The downside of opting for an smaller initial payment is that the interest owed increases and the payment shortfall from the initial years of the loan is then added on to the loan, potentially leading to a situation called "negative amortization." Negative amortization occurs when the loan payment for any period is less than the interest charged over that period, resulting in an increase in the outstanding balance of the loan.

You deserve a FREE loan pre-approval!

Why pay 'credit check' fees? Why pay 'loan application fees'? Not with my lender you won't!

I work with a TEAM of professionals dedicated to providing you the highest quality service at the lowest possible cost. On my TEAM is a world-class lender who has the best rates possible and lowest closing costs. This will save you $1000s over the life of your home loan. There is NO COST to get pre-approved! And there is no obligation to accept their FREE QUOTE.

"When is it a good time for me to get pre-approved?"

 

Now!! Before.. you start shopping for a home. Here's why:

Suppose you are a seller and you get two or more offers on your property. All things being equal except... one buyer (you!) provides the seller with a CERTIFICATE OF FINANCIAL APPROVAL (you're "good as gold!").. The other sellers say: "Well, gee, we like your home and we want to buy it. First we need to get the lender to say 'yes' to our loan application. It shouldn't take too long, you can wait - right?"

Which buyer gets the home? YOU!! Of course.

Being pre-approved (not 'pre-qualified' which means nothing since it's just a 'guess' by a lender based on unverified financial information) gives you BARGAINING POWER. It puts you in a stronger negotiating position when the sellers knows you are a serious, motivated buyer with the 'bank behind you.'

And just as importantly, you want to know BEFORE you start home shopping:

"How much home can I afford?"

"What financing options do I have?"

"What about the 'zero down' loans that I've heard so much about?"

"What will the interest rate be?"

"What will be the monthly payments?"

 

So don't delay saving $1000s of dollars in loan costs and get 'monster bargaining power' by getting free loan pre-approval now!

All fields are mandatory

First name:
Last name:
Address:
City:
State/province:
Zip/postal code:
Home phone:
Work/cell phone: Ext.
Email:
Confirm email:
Rate your credit:
Yearly gross income: $
How you will prove your income?
How much do you have saved? $
How long have you been looking for a home?
Are you commited to any real estate agent now? Yes No
Do you need to sell an existing residence before you buy? Yes No
What is the purchase price of the property you want to buy? $
How much do you want to borrow?
Ever had bankruptcy issues? Yes No
Ever had foreclosure issues? Yes No
 


Schedule a Consultation
First Name:
Your Phone Number:
( ) -
Good Time To Call
Submit button
Or Send Carmen a Text
Your Phone Number:
( ) -
Enter your text message:
send button
Carmen Gutierrez One West Realty 3155 Sedona Court, Bldg. C Ontario, CA 91764Powered by Homes7.com