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Denver Home Buyers Toolbox
Financing Options

Financing Options can be overwhelming to all of us. There's simply no way to know about all the available options, much less decide which one is best for you long-term. You can choose any lender, but if you want to ensure a worry-free closing, I have access to a team of first-class mortgage experts who always ensure that my customers not only understand what mortgage options are available, but more importantly, receive the best possible rates and terms.

Mortgage Options
Key Components to Most Adjustable Rate Mortgages (ARM)
What Your Monthly Mortgage Payment Consists of
Questions to Ask Lenders
How much can I afford?

 Mortgage Options & Loan Types
  • 30-year conventional fixed rate loan - benefits include:
    • Monthly payments for principle and interest remain the same over the life of the loan
    • Lower monthly payments when amortized over a 30-year payment period.
  • 10, 15 or 20-year conventional fixed rate loans - Benefits include:
    • Monthly payments of principle and interest remain the same over the life of the loan
    • Substantial savings of interest over the life of the loan
    • Payments are approximately 25-30% higher when amortized over a shorter period of time.
  • No-Point/Zero Closing Cost loan - Benefits include:
    • Less cash needed at closing. The interest rate will usually be ½ to ¾ of a percent higher when compared to loans that have points to pay at closing.
  • 7-year fixed rate balloon w/ 30-year amortization - Benefits include:
    • Slightly lower rate and/or less fees than the conventional 30-year fixed rate loan.
    • Payment of principle and interest remains the same over the 7-year period of time (at the end of 7 years, you will need to pay off the remaining balance with either a lump sum of cash or re-finance the remaining loan amount).
  • Adjustable Rate Mortgages (ARM) - There are many options with ARMs; the most popular tends to be the 1-year ARM with a 30-year amortization schedule. Benefits include:
    • Lower interest rate for the 1st year
    • Easier to qualify for the loan amount
    • You can qualify for a larger loan amount
    • A year ARM offers the ability to adjust downward at the 1 year anniversary of your loan.
  • 80/10/10 Conventional Loans
    • a loan program that consists of an 80% first mortgage + a 10% second mortgage + a 10% down payment. In this case, since there is no mortgage insurance required, the buyer will save the monthly premium.


 

 Key Components to Most Adjustable Rate Mortgages (ARM):
  • Index Rate - the rate to which the interest rate on an adjustable rate loan is tied. One of the more popular indexes used is the 1-year U.S. Treasury bill.
  • Margin - the amount added to the index rate that represents the lender’s cost of doing business.
  • Interest Rate Cap Per Adjustment - the maximum amount a borrower’s interest rate may increase or decrease at the time of adjustment..
  • Life Cap - this is the ceiling that the note rate cannot exceed over the life of the loan.
  • Amortization - a period of time in which gradual repayment of debt occurs by means of systematic payments of principle and/or interest. At the end of the time period the balance is zero.

 
 What Your Monthly Mortgage Payment Consists of:
  • Principle balance: this represents the money you originally borrowed and are paying back over the life of the loan.
  • Interest on loan amount.
  • Real estate taxes: normally 1/12 of the most recent tax bill.
  • Insurance (Home Owners): normally 1/12 of the yearly policy amount.
  • Private Mortgage Insurance (PMI) - Some borrowers who have less than 20% down are required to pay PMI.
  • Assessments (if any, condo, townhome, single family home) - depending on the type of dwelling, you may or may not be required to pay assessments.

 
 Questions to Ask Lenders
  • Based on our situation, what looks like the best program for us & why?
  • What is the projected time for processing and closing a loan?
  • Who services your loans?
  • What is the projected time for processing and closing a loan?
  • If PMI (Private Mortgage Insurance) is required, when and how does it go away?
  • What about your rates, terms, fees, etc - are they negotiable?
  • Are there any special underwriting guidelines you follow?
  • What if rates go down during the “lock-in” period? 
  • What do you need from us to get our loan approved?

 

Get Pre-Approved for a Mortgage Loan Today!
 
Home Mortgage Alliance - Tiffany Swisher - (303) 327-6689
  Fairway Independent Mortgage - Kari Abt - (303) 489-1205
  Wells Fargo Home Mortgage - Brett Reinhardt - 303-919-0361

 

RETURN TO HOME BUYERS TOOLBOX

If you require a more specific information on a property ASAP
contact Anthony Rael, REMAX Alliance at (303) 520-3179

 


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