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Types of Loans

Fixed Rate MortgageThe traditional fixed-rate mortgage has a constant interest rate and monthly payments that never change. This may be 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. As a rule of thumb, it may be harder to qualify for fixed-rate loans than for adjustable rate loans. 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.

This loan is fully amortized over a 15-year period and features constant monthly payments. It offers all the advantages of the 30-year loan, plus a lower interest rate—and you'll own your home twice as fast. The disadvantage is that, with a 15-year loan, you commit to a higher monthly payment. Many borrowers opt for a 30-year fixed-rate loan and voluntarily make larger payments that will pay off their loan in 15 years. This approach is often safer than committing to a higher monthly payment, since the difference in interest rates isn't that great.

Bi-weekly Fixed Rate Mortgage

A mortgage payment plan where payments are made every two weeks, as opposed to the more traditional monthly payment plan. Making mortgage payments every two weeks, as opposed to monthly, will result in the equivalent of one additional monthly payment being made each year. This extra payment is applied toward the principal balance of the mortgage, and will lead to substantial interest savings over the life of a long-term mortgage.

 Adjustable Rate Mortgages (ARM) (3/1 ARM, 5/1 ARM, 5/5 ARM, 7/1 ARM, 10/1 ARM)

These increasingly popular ARMS—also called 3/1, 5/1 or 7/1—can offer the best of both worlds: lower interest rates (like ARMs) and a fixed payment for a longer period of time than most adjustable rate loans. For example, a "5/1 loan" has a fixed monthly payment and interest for the first five years and then turns into a traditional adjustable-rate loan, based on then-current rates for the remaining 25 years. It's a good choice for people who expect to move (or refinance) before or shortly after the adjustment occurs.

When it comes to ARMs there's a basic rule to remember...the longer you ask the lender to charge you a specific rate, the more expensive the loan.

Construction Loans

Maximum Loan:  The Maximum loan-to-value ratio for a construction or construction/permanent loan is 80%, which may include a first construction advance of up to 65% of the land acquisition cost.

The construction loan interest rate will be set at time of commitment and reset should a commitment extension be necessary.  All construction advances be made in accordance with one of our construction schedules.  Regardless of the construction term it will automatically end upon issuance of Certificate of Occupancy, and the loan will become a permanent mortgage of the type originally chosen and committed.  The first full monthly payment (principal interest & taxes) will be due on the first day of the following month.  On bi-weekly’s it will be on the first payment due date of the following month and every 14 days thereafter.

Construction Only Loan: 

Interest Rates:  The interest rate for the construction only loan will be set at 1% above the Prime Rate in affect 10 days prior to the construction loan closing.  The rate at closing will remain fixed for the term of the construction loan.

Points:  A non-refundable half point origination fee will be charged on the total loan package (construction and permanent). 

Construction/Permanent Loan Interest Rate:

Interest Rates:  The interest rate for the construction loan will be determined by the permanent loan program that was chosen by the applicant prior to the construction loan closing. An applicant can lock in the interest rate for the permanent mortgage up to 60 days within the construction loan closing date (no lock in fee).  During the construction period, interest will only be charged on the amount of funds advanced.  Principal and interest payments will begin the month following the final construction draw.  The amortizing term will be based on the original loan term selected less the construction period (I.E. 360 month original term, 12 month construction period, 348 amortizing term).

Upon completion of construction, the borrower will have the option to modify to the current market rate if it is lower than the initial rate.  The modification fee is 1/10th of 1%, minimum $500, and the Final CO is required.

Points:  A non-refundable one point origination fee will be charged on the total loan amount (construction and permanent).  The applicant has the option to net the fee from the first draw.  The fee is based on the total loan amount at the time of the first construction draw.  A refund of the fee will not be made should the borrower reduce the loan amount after the initial draw.

Land Loans

We will finance the purchase of land up to a maximum loan-to-value of 65% with either a 5/1 ARM or 5/5 ARM.

Bridge Loans

To facilitate a new home purchase pending sale of present home.  This is a demand note secured with a mortgage and is granted for a period not to exceed 120 days.  The entire principal plus any unpaid interest is due and payable at maturity or upon the sale of the secured home, whichever is first.  A bonafide Contract of Sale with copy of purchaser's mortgage commitment may be required.  Including any existing first mortgage, the loan to value ratio cannot exceed 75%.

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