Press Enter


    Press Enter



    Jan 17 th, 2017
    Banking is a Business No Comments

    Learning to Speak Mortgage

    You’ve decided. 2011 is the year that you will finally buy a home for you and your family. You’re excited! But now that the word is out, everyone is bombarding you with loan advice. Frankly it is like being a foreign exchange student—you understand a bit of what is being said, but too much of it is vague. Here is a quick guide to “mortgage speak”:

    • Federal Housing Authority (FHA) loans. To qualify for a FHA loan you must have two years of continuous employment and a credit score of at least 620.

    • Veterans Administration (VA )loans. To qualify you must be a veteran or the spouse of a veteran. The veteran must have at least 90 days of active wartime service or 181 days of peacetime service. If the veteran was discharged, it must have been honorably.

    • Rural Housing Service (RHS) loans. The RHS offers two loans under this program. One program is for borrowers with income below 115 percent of the Area Median Family Income. Under the second program, a borrower’s income must fall between 50% and 80% of Area Median Family Income.

    • Fixed-rate mortgages. A mortgage where the interest rate is established for the life of the loan.

    • ARM (Adjustable Rate) mortgages. Mortgages where the interest rate changes at prescribed intervals during the life of the mortgage.

    • Hybrid mortgages. Combine features from the fixed rate mortgage and the adjustable rate mortgage. For example, the mortgage may have a fixed interest rate for the first five years of the mortgage and an adjustable rate for the remaining 25 years.

    • Interest only mortgages. Interest only mortgages NEVER reduce the principal. In other words if you take out a 20-year interest only loan for $213,000, at the end of those 20 years you will still owe $213,000.