For example, a 15-year
fixed-rate mortgage can save you many thousands of dollars in
interest payments over the life of the loan, but your monthly
payments will be higher. An adjustable rate mortgage may get you
started with a lower monthly payment than a fixed-rate mortgage --
but your payments could get higher when the interest rate changes.
The best way to find
the "right" answer is to discuss your finances, your plans and
financial prospects, and your preferences frankly with a Sands
Mortgage Company mortgage professional.
Terms and concepts you
should know:
Loan program
is a term that describes whether the interest rate changes and how
long the loan will last.
Conventional loans
are the most common type of mortgage. With low down
payments, conventional mortgages are usually insured by private
mortgage insurance companies such as GE, PMI, MGIC, etc.
Private mortgage
insurance
adds a relatively small cost to your financing and allows you to buy
a house with a lower down payment.
Conforming
loans "conform" to the criteria and limits set forth by the largest
buyers of loans,
Fannie Mae
and
Freddie Mac.
Jumbo loans
are bought by different investors. The loan amounts for jumbo loans
exceed the conforming guidelines.
Fixed rate loans
have interest rates that can never change.
Adjustable rate
mortgages (ARM)
have features that allow for future interest rate changes if rates
in general change. There are many variations of ARMs so be sure to
ask your lender to fully explain the features of the loans they
offer.
Loan-to-value (LTV)
is one of the most often-used jargon terms. If you have a house
valued at $100,000 with a $90,000 loan you have a 90% loan-to-value
($90,000 divided by $100,000 = 90%)
