Fixed rate mortgages offer the security of knowing that your rate will stay the same over the life of your loan. Typically offered as either a 15 or 30 year term, fixed rate mortgages are a good choice if you plan to stay in your home for seven years or longer. If you plan to move within seven years, then adjustable-rate loans are usually cheaper. However, when interest rates are low, fixed-rate loans are generally not that much more expensive than adjustable-rate mortgages and may be a better deal in the long run, because you can lock in the rate for the life of your loan.
Federal Housing Administration (FHA) and Veterans Administration (VA) loan programs offer qualifying individuals lower rates and less stringent qualification requirements for home financing. FHA loans are insured by the government and are designed to make home ownership more accessible to first-time and/or lower to middle income individuals and families. FHA loans may have lower downpayment requirements, lower interest rates, and allow higher debt-to-income ratios for borrowers. VA loans are also insured by the government and offer qualifying service members, veterans, and surviving spouses favorable rates and terms on home loans.
A jumbo loan is a mortgage in an amount that exceeds the standard 'conforming loan' limit. Interest rates and down payment requirements for jumbo mortgages tend to be higher than those for conforming loans due to the higher risk for the lender.
Adjustable rate mortgages (ARMS) can offer lower interest rates because their rates change with the market. The most popular ARMS, Hybrid ARMS, offer a low, fixed rate for a set period of time - typically 3, 5, or 7 years - and then turn into a traditional adjustable rate loan based on the then current rates for the remainder of the loan term. Adjustable rate mortgages are a good choice for people who expect to move (or refinance) before or shortly after the adjustment occurs.
A reverse mortgage allows homeowners over 62 years of age to use a portion of their home’s equity as collateral. Payments can be made to the borrower in a lump sum, monthly, or as a credit line, all of which are non-taxable. The borrower is not obligated to repay the loan until the home is sold, the borrower moves out of the property, or the last remaining borrower passes away. At that time, the estate has a certain amount of time to repay -or refinance- the balance of the reverse mortgage or sell the home to pay off the balance. Most reverse mortgages are insured by the Federal Government.