As a result of refinancing, your total finance charges may be higher over the life of the loan.
Financing options: What is the best loan for me?
This is where your Nations Lending Personal Mortgage Advisor really shines. The answer depends upon your intention regarding your new home. Are you planning on moving or selling within 5 years or so or are you planning on remaining in your home long term? Is it a rental? Is it for your kids? We see all kinds of answers, but determining the best loan from Nations Lending can be relatively straightforward.
Fixed rate loans, which are the most popular, are specifically a loan with a rate of interest that does not change. Each month your payment amount will be allotted to both interest and principle. Fixed rate loans are generally available for 10, 15, 20, 30 (most popular for first time buyers) and even 40 year loans. Many Nations Lending clients like the stability of a fixed payment, regardless of what interest rates do in the future.
An adjustable-rate mortgage, or ARM, has an introductory interest rate that lasts a set period of time and adjusts annually thereafter for the remaining time period. After the set time period, your interest rate will change and so will your monthly payment. For example, a 5/1 ARM translates to your interest rate is set for 5 years and then adjusts for 25 years; in a 3/1 ARM, your interest rate is set for 3 years then adjusts for 27 years.
The initial interest rates for adjustable rate mortgages are normally lower than a fixed rate mortgage, which in turn means your monthly payment is lower. If you only plan to stay in your home for a short period of time, an ARM loan might be advantageous to you because you plan on moving or selling your home before your initial mortgage rate adjusts. Some believe that ARMs are riskier because the interest rate may vary – but we remind our borrowers that rates can go up as well as down.
Nations Lending offers our clients “conventional conforming,” “FHA & VA,” and “jumbo” loans. Most recognize that conventional conforming loans are mortgages eligible for Fannie Mae’s or Freddie Mac’s programs. FHA (Federal Housing Administration) and VA (Veteran’s Administration) loans are also loan programs that Nations Lending offers, as well as jumbo loans where the loan amount is greater than the limits placed on these other loans. Once again your Personal Mortgage Advisor is in the ideal position to look at your individual situation and determine the best program that fits.
Sometimes we are asked about “interest only” loans. An interest only loan is not really interest only, meaning the borrower pays only interest on the loan. Interest-only loans contain an option to make an interest-only payment, for a fixed period of time, usually 5 to 7 years and then must begin paying off the principal. At any time during the interest-only payment period, however, the borrower can pay down the principal, too, if they choose. Once the interest-only period is up, the borrower may choose to refinance, repay the remainder of the loan in full or begin paying principal and interest each month like it’s a traditional mortgage.