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The Benefits of Common Loan Programs

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An Adjustable Rate Mortgage (ARM)

An Adjustable Rate Mortgage (ARM) is a mortgage loan that has the following benefits:

  • It has a low starting interest rate in comparison to the 30 & 15 year mortgage loans.
  • The low introductory rate is used to calculate the mortgage payment for a specified period of time.
  • The interest rate is adjusted periodically based on a pre-selected index.
  • The most common program is the One Year Adjustable Mortgage (one Year ARM).
  • Should the index rate increase, the borrower should be prepared to handle an increase in their monthly payment .The APR's on variable rate loans are subject to increase but may decrease from year-to-year.
  • The interest rate on the one year ARM is adjusted once each year, for 30 years.
  • The most commonly used index is the yield on the one-year Treasury Bill. The new interest rate is determined by adding this index to a set margin and is determined by the lender.

15 Year Fixed Rate Mortgage Program

A 15 year fixed mortgage has the following benefits:

  • This type of mortgage loan has fixed payments and is repaid by the borrower making 180 equal monthly payments over a period of 15 years. What is appealing about this loan is that the borrower can expect to make the same monthly payment for the entire term of the loan.
  • A 15 year mortgage loan is available for conventional, jumbo, and VA Loans. It is a widely accepted program used to finance a residential purchase.

A 30 Year Fixed Rate Mortgage Program

A 30 year fixed mortgage has the following benefits:

  • This type of mortgage loan has fixed payments and is repaid by the borrower making 360 equal monthly payments over a period of 30 years. What is appealing about this loan is that the borrower can expect to make the same monthly payment for the entire term of the loan. A 30 year mortgage loan is a widely accepted program used to finance a residential purchase, and is available for conventional, jumbo, and VA loans.

Jumbo Loan Programs

  • The benefits to having a jumbo mortgage is that it is a mortgage loan which is larger than the limits set by Fannie Mae and Freddie Mac . These loans usually carry a higher interest rate to enhance their value and marketability to investors.

VA Loan Programs (Department of Veterans Affairs)

The benefits of the VA loan include the following:

  • The VA loan is guaranteed by the Department of Veterans Affairs (DVA).
  • A major advantage of using a VA loan is that the borrower can finance the purchase of a property with no-money down.
  • The VA loan is restricted to individuals qualified by military service.
  • The Department of Veteran Affairs will guarantee the more popular 30 year fixed, 15 year fixed and 1, 3 aand 5 year adjustable rate loan programs.

Balloon Mortgage Programs

The 5/7 balloon mortgage is a balloon mortgage loan that has a short term that is generally 5 or 7 years.

  • The monthly payment is computed using a 30 year term.
  • The borrower will make the monthly payment for the scheduled loan term of 5 or 7 years.
  • At the end of this loan term, the borrower is then required to pay off the remaining balance in one lump-sum payment.
  • When the loan term is over, the borrower has the option to refinance the mortgage with a new loan.


D.W. Howard Realty Ltd, Brokerage

384 Ridge Road North
Ridgeway, ON L0S 1N0, Canada

905-894-1703
Phone
905-894-4476   Fax


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