Loan Programs

Fixed Rate mortgages loan

As the name implies fixed rate mortgage loans are loan types having interest rate fixed for the whole loan period. Among the loan programs this is considered to be the most feasible one and is best suitable for persons who have plans to stay in the house for a long period. Normally, the loan period for fixed rate mortgage is 10, 15, 20, 30 and 40 years, but being the traditional favorite 30-year fixed rate mortgage loan is the most popular one.

Adjustable Rate Mortgage loans (ARM)

Popularly known as 'ARM' loan, Adjustable rate mortgage loan is low rate interest loans best suited for persons who shift their houses often. If you're looking for a low interest mortgage loan, then ARM is the viable one as it can offer low initial interest rates. ARM loans will share the future risk of higher rates between borrower and lender. After the first fixed rate periods of three, five and seven years ARM rates will start increasing. Depending on the market trends the ARM rates will vary from .5 to 2 percent every year as the initial fixed rate period ends. Besides, having consumer safeguarding elements such as interest rate caps makes ARM loan a preferred loan type by many consumers.

Interest-only Mortgage

Interest-only mortgage or interest-only loan is a cheaper loan program compared to conventional mortgage, where the borrower only pays the interest every month. In this type of loan, a part of each month's interest will goes towards the principal and another part goes towards interest. Interest-only mortgage is so popular because it can afford borrowers a larger home at lower monthly payments. On the flip side it can be turned dangerous, especially in the down housing market. Generally, the interest rates are fixed for the first stipulated periods. Afterwards, they transform to a conventional loan, with a higher monthly payment.

Interest-only ARM

Interest-only ARM is ARM with only one initial interest-only payment period. During the interest-only period, only the calculated interest must be paid; no principal must be repaid. Once the interest-only period lapses, the mortgage must liquidate and will be paid off by the end of its original term. There will be a substantial increase in monthly payments as the initial interest-only term expires. Moreover, the principal balance in these loan type is not deducted during the interest-only period, the equity rates all depend entirely upon home-price appreciation.

Line Of Credit/ Credit Line

We cannot categorize Line of Credit (Credit Line) under loan types strictly, as it is an informal loan arrangement between a bank/vendor and a specified customer allowing the customer to borrow up to a pre-specified amount for a specific time period. By this credit arrangement the financial institution agrees to lend money of unsecured credit to a customer up to a specified limit. Line of credit is a good and flexible option to meet short-term cash requirements and can make it easily arrange before the funds are actually needed. Credit line also been called as bank line, revolver, revolving credit agreement etc.