Know Your Mortgage Loan Options
Each loan option is made up of 3 elements:
- Loan Term
- Interest Rate Type
- Loan Type
1. Loan Term
- The most common loan terms are 30 years and 15 years, but there may be other durations depending on your loan type and other factors.
- Usually, the longer your loan term, the more interest you’ll pay over the life of the loan, and your interest rate may be higher for a 30-year term than a 15-year term.
- Loans with shorter terms generally have lower interest costs but higher monthly payments than loans with longer terms, because you are paying the entire loan off in a fewer number of payments.
2. Interest Rate Type
- Insurance and taxes, which are often included in your monthly payment if your loan is escrowed, likely will increase over time because these costs generally rise.
- A fixed-rate option could be best if you value more certainty in long-term costs.
- During the initial period, often 5 or 7 years, your interest rate is fixed and won’t change.
- After the initial period, your loan is subject to adjustment periods, and the rates will adjust to current market conditions. This means there is a risk of the rate and the monthly payment increasing.
ARM terms vary though, so contact a Mr. Cooper Mortgage Professional for more information.
3. Other Popular Loan Options and Benefits
Loan amounts for most government-backed mortgages are capped based on the county where the property is located. Today, most counties have a limit of $726,200 for “Conventional” loans.
But if you need a higher limit, there are “Jumbo Loan” options that can allow qualifying homebuyers to borrow up to $2.5M.
Low and No Down Payment Options
These options are usually available through government programs to help make mortgages more affordable for homebuyers.
Flexible Credit Requirements
But there may be state or local programs available too that help borrowers who otherwise wouldn’t be able to afford or qualify for a mortgage.
- flexible credit requirements;
- lower-interest mortgages; and
- capped closing costs.
Make sure to ask one of our Mortgage Professionals about this option if you are a veteran.