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40-Year Fixed 30-Year Fixed 15-Year Fixed 10 / 1 ARM 7 / 1 ARM 5 / 1 ARM 3-Year ARM 1-Year ARM 7-Year Balloon 5-Year Balloon 6-Month Libor ARM Option/ Secured Option ARM Relocation Mortgages

Foreign National Programs B, C & D Non-Conforming Loans Fixed “Adjustable” Convertible Mortgages No Income/Asset Verification Affordability Programs No Cost Purchases Home Equity Lines of Credit Construction/Construction Perm Loans Deferred Interest Program Jumbo Loans 1st Time Homebuyer’s assistance Debt Consolidation Loans FHA Financing

Fixed Rate Mortgages

A fixed rate mortgage, occasionally abbreviated as FRM, is the simplest and the most common of all mortgage instruments. The most common are a 15 year and 30 year FRM. To be considered fixed rate, the mortgage must have two major characteristics:

1. The interest rate and payments must be fixed over the term of the mortgage.
2. At the end of the mortgage it must be paid off completely.

A mortgage that is paid off completely by the end of its term is said to be fully amortized. To amortize is simply to decrease the principal balance on the mortgage on a monthly basis, or pay down the mortgage balance. So, each month the amount of interest paid goes down and the amount of principal paid goes up.

Adjustable Rate Mortgage

An adjustable rate mortgage, abbreviated as ARM, involves mortgages that have interest rate changes over time. These types of mortgages come with a fixed period interest rate from one month to ten years, and can then adjust every month to year, after the fixed interest rate period ends. After the fixed period ends the interest rate is calculated based on adding the INDEX to the MARGIN.

There are many different types of Indicies, most of them are all published in the Wall Street Journal and change due to economic and market conditions.

The margin is always fixed and is the lenders profit margin over the index.

Depending on the terms of the ARM there are also interest rate caps that are written into the terms of the mortgage. An interest rate caps limit the extent to how high and ARM interest rate can rise over a specified period of time. For example a 5/1 ARM with interest rate caps of 5/1/5. The 5/1 ARM part means that the initial interest rate is fixed for 5 years and can change every year after that. The 5/1/5 interest rate caps mean that after the 5 year fixed period is over the interest rate can not go up over 5 percent of the initial interest rate on the loan, every year after that the interest rate cannot go up more than 1 percent, and the highest the interest can go over the life of the loan is 5 percent.

Interest-Only Mortgage

Interest-only programs have become more popular over the years, due to the fact that they keep your monthly payment lower and maximize your tax deductible interest every year. The rates and terms are very similar to the ARM programs except no principal reduction to the mortgage is paid back during a specified period of time, usually 5-10 years, until the loan recast as an amortized mortgage. The interest-only payment is calculated by taking the interest rate times the loan amount then dividing by 12.

Deferred Interest or Negative Amortization Loans

These are adjustable rate mortgages and the reason they are considered deferred interest is because the loan balance grows larger because the initial payments do not cover the total principal and interest payment of the mortgage. These loans start with a fixed payment that is a smaller percentage of the actual interest rate. This payment is fixed for a year and then increases each consecutive year till the end of year five, when the loan recast as an amortized mortgage to pay the entire loan balance off over the next 25 years. The advantage to this mortgage is they give the borrower the lowest possible payment and let the borrower use the equity trapped in their home. These loans have become increasingly popular since most home owner only keep a mortgage for 3-5 years and appreciation rates have been much higher than the amount of interest add to the loan balance.