Loan Terms

    "Choosing the right loan term from all that are available can be confusing and yet at the same time is VERY important for you to get the best rate and payment for you; based on the length of time you plan of staying at your home. The best way to approach this is to have a familiarity of what terms are available and why they are commonly accepted. This will help you better determine what loan term is going to best meet your needs and goals. I will personally evaluate your income situation, and help advise you of what loan term will work best with your income and your short and long term goals in terminology that is easy to understand."
                                                                
                                                                        Brian Dawson
                                                                        Sr. Loan Officer 
                                                                        NMLS #142285
 Below is a list of available loan terms and a brief description of their pros and cons, and why they are commonly used. Take a look at what is available and prepare any questions for me for when I analyze your situation and recommend a term for you.

                                                       

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 1.    30 Year Fixed Rate: (25 and 20 year also available)

This loan has a Thirty(30) year amortization period with a fixed rate for the life of the loan. 
Pros:

• A mortgage payment that will remain stable for the life of the loan.
• Best suited for borrowers looking to own the property for more than Eight (8) years.

Cons:

• Long term fixed rates are not as competitive as adjustable rates.
• If you plan on owning the property for a period of One to Seven (1-7) years, an adjustable mortgage saves you more money over the life of the loan.

 2.  15 Year Fixed Rate:

Similar to the 30 Year Fixed Rate program; this loan instead carries an amortization of Fifteen (15) years.
Pros:

• Aggressive program that allows you to pay down your principle balance at a faster rate than a standard Thirty (30) year program.

Cons:

• With a smaller amortization schedule payments are larger than a 30 year note.
• Decreases the amount of cash flow one may have on a monthly basis with the larger payment.

  3.      3 , 5 or 7 Year ARM:

Your interest rate is fixed for the first three, Five, or seven (3,5 or 7) years with amortization schedule of Thirty (30) years.
Pros:

• This program allows you to take advantage of a lower rate compared to conventional longer term fixed rate programs.
• The lower rate translates into a lower monthly payment, increasing personal cash flow per month.
• Provides security of an interest rate fixed for a set number of years.

Cons:

• Becomes an adjustable rate mortgage after initial fixed term, which can lead to a higher payment after Five (5) years if major indices increase.

  4.   5 and 7 Year Interest Only Option ARM:

Similar to the standard 5 and 7  Year ARM program, except the payment due is the interest that accrues on the loan every month, excluding the principle balance.
Pros:

• An excellent way to increase monthly cash flow, due to very low monthly payments.
• Most interest only programs allow a paydown of principle without penalty.
• A great program for individuals whose income fluctuates on a monthly basis (such as self employed borrowers).

Cons:

• Paying only interest payments does not reduce the amount of the principle balance on the loan.

5.      5 and 7 Year Balloon:

This product has a Thirty (30) year amortization with a fixed rate for the first Seven (7) years, after which the borrower has the conversion option to a fixed rate at the end of  five or Seven (5 or 7) years.
Pros:

• Allows the borrower the option to take advantage of a lower interest rate for the first Seven (7) years of the loan.

Cons:

• At the time of maturity, rates may be significantly higher than the start rate.
• In deciding not to convert to a fixed rate, the loan balloons and your remaining principle balance is due in full.