To understand loans and mortgages we be to understand loan limits first. If your loan amount exceeds the be below you ordain qualify for a Jumbo Loan which carries higher arouse rate. One-Family (single family homes) $417,000Two-Family(convert) $533,850Three-Family (triplex) $645,300Four-Family(fourplex) $801,950FIXED Loans:30 Year Fixed Mortgage RatesThis loan program is fixed for 30 years. Your arouse rate will not change for 30 years. This is ideal for people who plan to stay at their present property for a long period of time.20 Year Fixed Mortgage RatesFixed for 20 years. Your payment will be higher than 30 year fixed loan becuase your loan call is only for 20 years. arouse rate ordain not dress for 20 years.15 Year Fixed Mortgage Rates15 year fixed loan has a loan call of 15 years and will not change during this period. Your monthly payment on this loan program will be much higher than 20 years fixed or 30 years fixed. Use this loan program if you plan to sell your home in 5-8 years. arouse evaluate will not change for 15 years. ARM (Adjustable evaluate Mortgage)ARM Loans are fixed for a certain period of measure where after that period ARM loan becomes an adjustable loan. How do they work?Each ARM Loan schedule has these options:1) Index: Most comon index-LIBOR2) Margin: Is given to you by your lender and it is the difference between the list rate and the interest charged to the borrowerFor example 5/1 ARM. This give is fixed for 5 years after which in 6th year it becomes an adjustable loan. Your loan officer will tell you what your list is and what your margin is. Usually 5/1 arm is tied to 1-year treasury index and margin is around 2.00%-3.00%Your index + margin = Fully Index evaluate. Your new note rate (interest evaluate) after 5th year. What about the 6th year? What would your payment be?Let's say that your loan command told you that your margin is 2.5% with 1 year treasury list. You ordain undergo to be up 1 year treasury index for a specific month.1 year treasury as of Oct.2005 is 4.18 and you know that your margin is 2.5%. Therefore you new interest rate is 1 year treasury 4.18% (index) + 2.5% (margin) = 6.68% for the begining of 6th year. Index rate are move on monthly basis therefore your payment may flunctuate each month. In most cases banks wills end you a statement advising you that your evaluate will change.3) To defend consumers from high index rates lenders implemented a CAPS. An example of this is a 2/6 cap which allows the interest rate on your ARM loan to go up or down by no more than two percent every adjustment period and has a be check of six percent for cumulative changes. Therefore a 2/6 cap on a 5% ARM will accept a maximum rate (6 + 5%) of no more than 11%. In some cases you will see 2/2/6 which means 2% adjustment with 2 year prepayment penalty and total of six percent of cumulative changes.4) With an arm you can undergo either a fixed evaluate or you can choose an Interest Only structure loan.1/1 ARM Mortgage Rates1 year ARM (Adjustable Rate Mortgage) is fixed for 1 year and in 2nd year it becomes an adjustable.3/1 ARM owe Rates3 year ARM (Adjustable evaluate Mortgage) is fixed for 3 years and in 4th year it becomes an adjustable.5/1 ARM Mortgage Rates5 year ARM (Adjustable Rate Mortgage) is fixed for 5 years and in 6th year it becomes an adjustable.7/1 ARM Mortgage Rates7 year ARM (Adjustable evaluate owe) is fixed for 7 years and in 8th year it becomes an adjustable.10/1 ARM Mortgage Rates10 year ARM (Adjustable Rate owe) is fixed for 10 years and in 11th year it becomes an adjustable. Interest Only LoansFor example if a 30-year fixed-rate loan of $100,000 at 8.5% is arouse only the payment is.085/12 times $100,000 or $708.34. This is an example of interest only payment. Each loan payment consists of Interest and Principal. Here you ordain be paying an interest each month and your principal will be adding to your balance thus increasing it. You may also pay both principal and interest. If a lender offers you an Interest only Loan these loans are tied to an list just like ARM loans. MTA list: The MTA index generally fluctuates slightly more than the COFI although its movements track each other very closely.. 1 Month MTA ARM owe Rates. 3 Month MTA ARM owe Rates. 6 Month MTA ARM Mortgage Rates. 12 Month MTA ARM Mortgage RatesCOFI Index: This list rise (and fall) more slowly than rates in general which is good for you if rates are rising but not good for you if rates are falling.. 1 Month COFI ARM Mortgage Rates. 3 Month COFI ARM Mortgage RatesLIBOR Index: LIBOR is an international index which follows the world economic condition. It allows international investors to be their cost of lending to their be of funds. The LIBOR compares most closely to the CMT list and is more open to quick and wide fluctuations than the COFI.. 6 Month LIBOR ARM owe Rates. 12 Month LIBOR ARM Mortgage RatesPay Option ARM LoanPay Option ARM in a new loan program allowing customers to choose from up to 4 different payments. This loan program is part of an ARM but with added flexibility of making one of the 4 payments. Your intial go away rate varies from 1.000% to anywhere around 4.000%. The intial start evaluate is held only for one month after that interest rate changes monthly.4 major choises are:1) Minimum payment: Fot the first 12 months interest rate is calculated using the go away evaluate after that arouse rate is calculated annually. Example:Loan Amount: $200,000.00sign Rate: 1.25%Index: 3.326 (MTA as of October 2005)Margin: 2.75%Payment Cap: 7.5%Fully Indexed Rate: 6.076% (ndex + margin )Minimum Payment Changes:Year 1 $666.50 Minimum PaymentYear 2 $716.49 = $666.50 + 7.50%Year 3 $770.22 = $716.49 + 7.50%Year 4 $827.99 = $770.22 + 7.50%Year 5 $890.09 = $827.99 + 7.50%The Option ARM's 7.5% payment cap limits how much the payment can change magnitude or change magnitude each year except for every fifth year (beginning in the 10th year on certain programs) when the cap does not apply. In the event your balance exceeds your original loan be by 125% (110% in N. Y.) the payment amount may dress more frequently without regard to the payment cap. Becasue you are paying "minimum payment" this option will delay a payment of an interest which will be added to your balance. Minimum Payment Adjustment Period: The minimum payment is usually set to 12 months unless negative amortization limit is reached. Minimum Payment Cap: This is a limit on how much the minimum payment can change. Your payment cap will be 7.5% for the first five years. On your next payment due your minimum payment cannot increse or decrease more than 7.5%. If it does than a give is recast. cast (Recasting) or re-calculating your give is a way of limiting contradict amortization (neg-am). Option ARM's cast every 5 years. When the loan is recast the payment required to fully amortize the give over the remaining call becomes the new minimum payment2) arouse Only Payment: With arouse Only you ordain forbid deffered interest becausue you are paying principal and interest. If you pay only arouse or Principal your loan balance will increase because you are adding either pricipal payment or arouse payment to your give balance thus leading towards Neg-Am give. Your payment may change on monthly basis based on ARM index (LIBOR,COFI,MTA).3) Fully Amortizing 30-Year Payment: It's calculated each month based on the prior month's interest rate loan balance and remaining loan call. When you decide this.
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