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The traditional fixed rate mortgage is the most common type of loan program, where monthly principal and interest payments never change during the life of the loan. Fixed rate mortgages are available in terms ranging from 10 to 30 years and in most cases can be paid off at any time without penalty. This type of mortgage is structured, or “amortized” so that it will be completely paid off by the end of the loan term.
Adjustable Rate Mortgages (ARM)s are loans whose interest rate can vary during the loan’s term. These loans usually have a fixed interest rate for an initial period of time and then can adjust based on current market conditions. The initial rate on an ARM is lower than on a fixed rate mortgage which allows you to afford and hence purchase a more expensive home. Adjustable rate mortgages are usually amortized over a period of 30 years with the initial rate being fixed for anywhere from 1 month to 10 years.
A mortgage is called “Interest Only” when its monthly payment does not include the repayment of principal for a certain period of time. Interest Only loans are offered on fixed rate or adjustable rate mortgages as wells as on option ARMs. At the end of the interest only period, the loan becomes fully amortized, thus resulting in greatly increased monthly payments. The new payment will be larger than it would have been if it had been fully amortizing from the beginning. The longer the interest only period, the larger the new payment will be when the interest only period ends.
You won’t build equity during the interest-only term, but it could help you close on the home you want instead of settling for the home you can afford.
A graduated payment mortgage is a loan where the payment increases each year for a predetermined amount of time (such as 5 or 10 years), then becomes fixed for the remaining duration of the loan.
When interest rates are high, borrowers can use a graduated payment mortgage to increase their chances of qualifying for the loan because the initial payment is less. The downside of opting for an smaller initial payment is that the interest owed increases and the payment shortfall from the initial years of the loan is then added on to the loan, potentially leading to a situation called “negative amortization.” Negative amortization occurs when the loan payment for any period is less than the interest charged over that period, resulting in an increase in the outstanding balance of the loan.
A renovation loan lets borrowers fund the purchase and renovation in one transaction. It also allows them to customize a property — just not to buy a place, but to make it into the home they want.
We specialize in renovation loans, which fund improvement projects consisting of anything from minor improvements to major renovations. Our Renovation Certification training will educate you about what a renovation loan can do for borrowers, and the opportunities it represents for you.
Construction-to-permanent loans let borrowers fund construction and a long-term mortgage in one transaction. That translates into advantages for homeowners, and opportunities for builders.
With construction-to-permanent financing, the construction loan and the long-term mortgage are all part of the same transaction. One closing will take borrowers from construction, through moving day, through their new lives as owners and occupants of special homes built to meet their individual needs.
A renovation loan lets borrowers fund repairs and a long-term mortgage, all in one transaction. So it can help you sell properties that might otherwise be unsellable because they need repairs. Our Renovation Certification training will educate you about all the possibilities of this exciting loan product.
From buying your first home to refinancing into a lower interest rate loan, our Finomus Loan Officers are here to help you every step of the way. Our mortgage experts are committed to helping you find the loan solution that fits your needs. Get started today and contact a Finomus Loan Officer who can get you to the next phase of homeownership.
Finomus Home Loans is your premiere mortgage lender located in Bridgewater, New Jersey. We pride ourselves on offering some of the lowest rates nationwide and make the loan process simple, straightforward and fast for borrowers seeking a mortgage.
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Finomus Home Loans LLC. All rights reserved. NMLS #1964802 (For licensing information, go to: www.nmlsconsumeraccess.org(opens in a new tab)). Additional information available at finomus.com/legal. Interest rates and products are subject to change without notice and may or may not be available at the time of loan commitment or lock-in. Borrowers must qualify at closing for all benefits.
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