Understanding Loan Programs..
New Horizon Mortgage has a wide array of products and programs that are specifically designed to support your financial needs and goals. Below is an overview of some of the more popular programs.
Fixed Rate Mortgage
Terms Available:
- 40, 30, 25, 20, 15, 10 years
Advantages:
- Monthly payments are fixed over the life of the loan
- Interest rate will not change
- Protected if rates increase
- Can refinance if rates decrease
Disadvantages:
- Higher interest rates than the ARM program (Adjustable Rate Mortgage)
- Rate does not decrease if market rates decrease
Overview:
- Good for borrowers who are planning on staying at their home for a long period of time and will not need to refinance to take cash out of their house for home improvements, debt consolidation, or personal matters etc...
Adjustable Rate Mortgages (ARMs)
Terms Available:
- 6 months, 1, 2, 3, 5, 7, 10 years
Advantages:
- Lower interest rates than fixed mortgage
- May qualify for higher loan amount with ARM
Disadvantages:
- More risk
- Payments will usually increase after fixed period
Overview:
- Keeps your payments lower if you aren't planning on staying at your house for a long period of time. Also, perfect for borrowers who have damaged credit and are trying to increase their credit scores.
Imperfect or Damaged Credit
Terms:
- All available
Advantages:
- Potential to increase credit if mortgagee is paid on time
- When used for debt consolidation, you maay be able to reduce your total monthly debt payment
Disadvantages:
- Higher interest rates
- Unfavorable terms; may not be able to get a fixed rate
- May sometimes have to pay points
Overview:
- Although most of these types of loans aren't fixed, they can be very helpful in rebuilding borrowers credit, putting them in a better situation down the road. AKA: "Band-Aid Loan"
100% Combo Programs 80%/20% or 75%/25%
Terms:
- All available
Advantages:
- No down payment
- No PMI (Private Mortgage Insurance)
- Available for 1st Time Homebuyers
- Available for stated income borrowers
- Rates usually higher than with down paymment
- Have to make two mortgage payments
Overview:
- You can use the money that you would havve had to use for a down payment to furnish your house and do cosmetic repairs.
Stated Income Program
Terms:
- All available
Advantages:
- Don't have to verify income
- Faster approvals
Disadvantages
- Usually higher interest rates
Overview:
- Great for self-employed borrowers, makes for a much smoother loan process. This program is not intended for inflating income in order to qualify for a higher loan amount.
Interest Only Loans
Terms:
- All available
Advantages:
- Lower monthly payment
- Option to make higher payment to pay down the principal balance
- Larger tax deduction
- Use extra money for other debts or invesstments
Disadvantages:
- Higher interest rates
- Principal balance does not change unless you make extra payment
- Potential for high payments when interest only term is over and no extra principal payments had been made
Overview:
- Great program for savvy investors, and borrowers who use the program to their advantage. If not used properly, this program could end up hurting the borrower.
Home Equity Line of Credit
Terms:
- 30, 25, 20, 15
Advantages:
- Pay interest only on what you borrower
- Interest is tax deductible
- Rates are much lower than credit card rates
Disadvantages:
- Interest rates are not fixed
Overview:
- Perfect for borrowers that owe nothing on their house and are planning some home improvements.
