An adjustable-rate mortgage (ARM) has an interest rate that can change during the life of the loan, with the possibility of both increases and decreases to the interest rate and the amount of the monthly mortgage payment.ARM interest rates generally remain fixed during an initial period, after which rates adjust periodically—typically, annually, semi-annually, or monthly according to an index and a margin, each of which is specified in the related mortgage note. Rates are typically capped in terms of the size of the rate adjustment at the first change date (initial cap) and/or subsequent change dates (periodic cap) and the maximum rate over the life of the loan (life-of-loan cap).The interest rate for an ARM is tied to a financial index. When comparing ARMs that have different indices, you may wish to consider how that index has performed over an extended period of time, although past index values may not be indicative of future index values. Commonly used indices include CMT (Constant Maturity Treasuries), LIBOR (London Interbank Offered Rate), and COFI (11th District Monthly Weighted Average Cost of Funds Index of the Federal Home Loan Bank of San Francisco).Hybrid ARMs—also known as fixed-period ARMs—have fixed rates for a designated number of years (e.g., 3, 5, 7, or 10 years), after which the loan adjusts on a regular periodic basis as set forth in the related mortgage note. Hybrid ARMs have become more common over the last few years.Some ARMs allow for "negative amortization." A negative amortization ARM is one in which the monthly payment does not change as often as the interest rate does, or a payment cap applies, or both. If any of your payments are not sufficient to cover the interest due, the difference is added to your loan amount. Generally, at the end of the year, the loan is re-amortized to calculate a new monthly payment. Interest is then charged on the higher principal balance. In the case of negative amortization ARMs, caps generally apply to the monthly payment amount rather than to the interest rate. Negative amortization ARMs also limit the amount by which the principal balance increases due to negative amortization. Some common limits require re-amortization when negative amortization causes the unpaid principal balance to exceed 110%, 115% or 125% of the original loan principal balance. You should note that with negative amortization ARMs, the amount of equity in a mortgaged property may be reduced and the principal balance could become higher than the original loan amount.Loan Features· The most common types of ARMs include: o 6-Month; o 1/1 (adjusts annually) o 3/1 (fixed for three years, adjusts annually thereafter); o 3/3 (fixed for three years, adjusts every three years thereafter); o 5/1 (fixed for five years, adjusts annually thereafter); o 7/1 (fixed for seven years, adjusts annually thereafter); and o 10/1 (fixed for ten years, adjusts annually thereafter).· Changes to the interest rate are limited by initial rate caps, periodic rate caps, and life-of-loan rate caps (each as described above). · Adjustments are computed by adding a specified index value to the margin specified in the mortgage note.Considerations· Lower interest payments in the short-run compared to comparable fixed-rate loans. Because ARM rates are typically lower than rates for 30-year fixed rate mortgages, monthly payments are generally lower initially. · Your rate and payment may increase, or decrease, during the term of the loan.

Balloon Mortgage

A balloon mortgage is a type of fixed-rate mortgage loan in which the principal and interest payments are amortized over a longer period (30 years) than the actual term of the mortgage. For example, a 7-year balloon mortgage has a term of 7 years, but the payments are calculated as if the term of the loan was 30 years.At the end of the balloon period, you must pay off the outstanding balance with a lump-sum payment or may be able to refinance for the remaining term of 23 years. The option to refinance is conditional, meaning you have to meet certain conditions (as described below).Loan Features· The refinance option is not automatic: you must exercise it by making a written request. · You generally must occupy the property as a principal residence or second home (some exceptions may apply). · Refinancing conditions may include payment of closing costs and a lender fee, as well as no 30-day late payments in the previous 12 months and no other liens against your property except for taxes and special assessments not yet due and payable (some exceptions may apply). · Generally, no need to re-qualify when refinancing at the end of 7 years, as long as the new interest rate is not more than 5 percentage points above the loan???s original interest rate. · Available for conventional fixed-rate, first mortgages, including the purchase of a principal residence, second home or investment property (some restrictions may apply).Considerations:· The interest rate on a balloon mortgage may be lower than the interest rate on a comparable 30-year fixed-rate mortgage. · You will be responsible for paying off or refinancing the full amount of the outstanding loan balance at the end of the loan term (when the "balloon payment" becomes due). · May be a good choice if you plan to sell or refinance your home within 7 years and you want a relatively low monthly payment during that time. · The refinance option may provide a "safety net" if a planned relocation does not take place or economic conditions prevent you from moving to a larger home (as long as you meet all of the required conditions needed to exercise the refinance option).

Bi-Weekly

Biweekly Mortgages

If you wish to pay off your mortgage more quickly than with a traditional 30-year fixed-rate mortgage, significantly reducing the amount of interest you pay over the life of the loan, a Biweekly Mortgage may be for you.Biweekly Mortgage payments are made every two weeks, resulting in 26 (sometimes 27) payments per year. As a result of the number and frequency of payments, you can pay off the loan faster than with a traditional 30-year, fixed-rate, monthly payment mortgage. For example, a loan that ordinarily would take 30 years to amortize fully could be paid off after just 22 years of biweekly payments depending on the interest rate of the loan.A Biweekly Mortgage may also save you interest expenses over the life of the loan. For example, a $150,000 loan at a 7 percent interest rate paid monthly over 30 years will cost a borrower approximately $53,325 more in interest over the life of the loan than a Biweekly Mortgage for the same loan amount and interest rate.Loan Features· Make a payment every 14 days instead of once a month (using a 365-calendar day year), so each payment amount is half the monthly payment for a comparable fixed-rate mortgage. · Payments will be applied to interest, principal, and other charges when received, resulting in a lower overall interest payment.Considerations· Build up equity in your home, save on interest expenses, and pay off your loan faster than with a traditional 30-year, fixed-rate monthly payment mortgage, since making payments every 14 days is similar to making one extra payment per year. · Because biweekly payments are half the amount of comparable monthly payment mortgages, the Biweekly Mortgage does not require significant additional outlays in order to obtain the benefit of a faster payoff. · Biweekly payments can be timed to coincide with payroll deposits for easier budgeting.

Fannie 3/2

The Fannie 3/2 mortgage is part of Fannie Mae's suite of Community Lending mortgage products and options designed to help low- and moderate-income borrowers overcome the two primary barriers to homeownership: lack of funds for the down payment and insufficient income to qualify.This fixed-rate, 15- to 30-year mortgage requires only a 5 percent down payment, with just 3 percent from your own funds. The remaining 2 percent can come from a relative; federal, state, or local government agency; nonprofit organization; or employer. Loan Features· Down payment of 5 percent—with only 3 percent required from the borrower's own funds and 2 percent that can come from other approved sources such as Community Seconds®, a gift, grant, or unsecured loan from a nonprofit, government agency, or employer. · 30-year, 20-year, or 15-year repayment periods (fixed-rate mortgages only; no ARMs allowed). · Up to 38 percent of borrower's monthly income can be used for housing costs and other debts, such as credit cards or student loans, and up to 33 percent of borrower's gross monthly income can be used for housing costs (principal, interest, taxes, and insurance). · To qualify for this loan, you must earn no more than 100 percent of the area median income for your Metropolitan Statistical Area (MSA) or county. However, exceptions to the area median income limit are available in specified high-cost areas: o 120% in Bergen/Passaic, New Jersey MSA o 120% in Portland, Oregon MSA o 120% in Seattle, Washington MSA o 125% in Newark, New Jersey MSA o 135% in Boston, Massachusetts MSA o 140% in the State of California o 165% in New York, New York MSA o 165% in Suffolk, Nassau, Westchester and Rockland counties (New York) o 170% in the State of Hawaii· Requires that borrowers have cash reserves equal to one month's mortgage payment after closing. · Borrowers must attend a home buyer education session offered or approved by their lender. · Can be used to buy one-family, principal residences, including condos, and planned unit developments. · Can be used with Fannie Mae's Community Seconds®, Community Land Trust, and Lease Purchase options.Considerations· The 5 percent down payment requirement—with only 3 percent required from your own funds—means you need less cash up front to buy a home. · The expanded debt-to-income ratios enable you to qualify using up to 33 percent of your gross monthly income for housing expenses (instead of the standard 28 percent with traditional conventional mortgages) and 38 percent for your total monthly debt expenses (instead of the standard 36 percent).ExampleHere is a hypothetical example:· $100,000 purchase price · 5% down payment · 1% origination fee (including prepaid interest and mortgage insurance) · 30 year fixed rate · 8% interest rate · 8.112% APRThe interest rate and APR shown are examples only and are not intended to represent actually available terms.Fannie Mae's Community Seconds is a registered trademark and Fannie 3/2 is a trademark of Fannie Mae.

Fannie Mae 97

The Fannie 97 mortgage is part of Fannie Mae's suite of Community Lending mortgage products and options designed to help low- and moderate-income borrowers overcome the two primary barriers to homeownership: lack of funds for the down payment and insufficient income to qualify.

This is a fixed-rate mortgage loan, with terms between 15 years and 30 years. It is ideal for the potential low- and moderate-income home buyer who has enough income to handle monthly mortgage payments, but is having difficulty accumulating cash for the down payment.

Loan Features

· Down payment of 3 percent from the borrower's own funds.

· 30-year, 20-year, or 15-year repayment periods (fixed-rate mortgages only; no ARMs allowed).

· Up to 38 percent of borrower's gross monthly income can be used for housing costs and other recurring monthly debts, such as installment debts, revolving debts, and other obligations, and up to 33 percent of borrower's gross monthly income can be used for housing costs (principal, interest, taxes, and insurance).

· To qualify for this loan, you must earn no more than 100 percent of the area median income for your Metropolitan Statistical Area (MSA) or county. However, exceptions to the area median income limit are available in specified high-cost areas:

o 120% in Bergen/Passaic, New Jersey MSA

o 120% in Portland, Oregon MSA

o 120% in Seattle, Washington MSA

o 125% in Newark, New Jersey MSA

o 135% in Boston, Massachusetts MSA

o 140% in the State of California

o 165% in New York, New York MSA

o 165% in Suffolk, Nassau, Westchester and Rockland counties (New York)

o 170% in the State of Hawaii

· Requires that you have cash reserves equal to one month???s mortgage payment after closing.

· You must attend a home buyer education session offered or approved by your lender.

· Can be used to buy one-family, principal residences, including condos and properties within a planned unit development.

· Can be used with Fannie Mae's Community Seconds® and Community Land Trust.

Considerations

· The 5 percent down payment requirement—with only 3 percent required from your own funds—means you need less cash up front to buy a home.

· The expanded debt-to-income ratios enable you to qualify using up to 33 percent of your gross monthly income for housing expenses (instead of the standard 28 percent with traditional conventional mortgages) and 38 percent for your total monthly debt expenses (instead of the standard 36 percent).

Example

Here is a hypothetical example:

· $100,000 purchase price

· 5% down payment

· 1% origination fee (including prepaid interest and mortgage insurance)

· 30-year fixed-rate

· 8% interest rate

· 8.112% APR

The interest rate and APR shown are examples only and are not intended to represent actually available terms.

Fannie Mae's Community Seconds is a registered trademark and Fannie 3/2 is a trademark of Fannie Mae.

Fannie Mae community homebuyers program

Fannie Mae's signature low down payment product—Fannie Mae's Community Home Buyer's Program—enables borrowers to use a greater amount of their monthly income toward housing costs compared to other standard mortgage products. It is part of a suite of Community Lending mortgage products and options designed to help low- and moderate-income borrowers overcome the two primary barriers to homeownership: lack of funds for the down payment and insufficient income to qualify.This is a fixed-rate mortgage, with terms between 15 years and 30 years. It is ideal for the potential low- and moderate-income home buyer who has enough income to handle monthly mortgage payments, but is having difficulty accumulating cash for the down payment.Loan Features· Down payment of 5 percent. · 30-year, 20-year, and 15-year repayment periods (fixed-rate mortgages only; no ARMs allowed). · Up to 38 percent of borrower's monthly income can be used for housing costs and other debts, such as credit cards or student loans, and up to 33 percent of borrower's gross monthly income can be used for housing costs (principal, interest, taxes, and insurance). · To qualify for this loan, you must earn no more than 100 percent of the area median income for your Metropolitan Statistical Area (MSA) or county. However, exceptions to the area median income limit are available in specified high-cost areas: o 120% in Bergen/Passaic, New Jersey MSA o 120% in Portland, Oregon MSA o 120% in Seattle, Washington MSA o 125% in Newark, New Jersey MSA o 135% in Boston, Massachusetts MSA o 140% in the State of California o 165% in New York, New York MSA o 165% in Suffolk, Nassau, Westchester and Rockland counties (New York) o 170% in the State of Hawaii· The maximum income limit is removed if this mortgage is combined with the Fannie Neighbors® mortgage option for eligible properties located in HUD-designated central cities, underserved areas, and eligible minority and low-income census tracts. · Does not require that you have cash reserves after closing. · You must attend a home buyer education session offered or approved by your lender. This requirement can be waived if borrowers meet all three of the following conditions: (1) they have previously owned a home; (2) they make at least a 5 percent cash down payment from their own resources (not a gift, loan, or grant); and (3) they have at least two months' mortgage payments in reserve after closing. · Can be used to buy one-family, principal residences, including condos and properties located in a planned unit development. · Can be used with Fannie Mae's Community Seconds®, Community Land Trust, FannieNeighbors, and Lease Purchase options.Considerations· The 5 percent down payment requirement means you need less cash up front to buy a home. · The expanded debt-to-income ratios enable you to qualify using up to 33 percent of your gross monthly income for housing expenses (instead of the standard 28 percent with traditional conventional mortgages) and 38 percent for your total monthly debt expenses (instead of the standard 36 percent). · To qualify for this loan, generally your household income must not exceed the area median income. Check with your lender or industry professional to determine if your property falls within a specially designated area that allows a higher household income limit or provides an exemption from the income limit.ExampleHere is a hypothetical example:· $100,000 purchase price · 5% down payment · 1% origination fee (including prepaid interest and mortgage insurance) · 30-year fixed-rate · 8% interest rate · 8.112% APRThe interest rate and APR shown are examples only and are not intended to represent actually available terms.Community Seconds and FannieNeighbors are registered trademarks and Fannie Mae's Community Home Buyer's Program is a trademark of Fannie Mae.

Fixed Rate Mortgage

Fixed-rate mortgages are the most common and most popular type of mortgage loan.

Your monthly payment is more stable with a fixed-rate mortgage than with other types of mortgages—because the interest rate is fixed for as long as you have the loan. With a standard fixed-rate mortgage, your monthly payment of principal and interest does not change over the life of the loan. Your total monthly payment can change if it also includes property taxes and insurance (e.g., homeowners, hazard, flood or mortgage insurance), which may increase or decrease.

Fixed-rate mortgages are available for various repayment periods: 30 years, 20 years, and 15 years are the most common loan terms.

Typically, the shorter the term, the less interest you pay over the life of the loan. For example, with a 20-year term on a loan amount of $100,000 at a 6.5% interest rate, you save roughly $48,000 in interest costs compared to a 30-year term loan with the same loan amount and interest rate.

However, the longer the term, the lower the monthly payment because you stretch out repayment of the loan principal over a longer period of time. For example, the monthly payment on a 30-year term loan of $100,000 at a 6.5% interest rate is roughly $632 versus a monthly payment of roughly $745 for the same loan with a 20-year term.

Loan Features

· Interest rate is fixed for the life of the loan.

· Monthly payments of principal and interest are the same for the life of the loan.

· The loan is usually fully amortized so it is completely repaid at the end of the loan term (most of the monthly payment is applied to interest in the early life of the loan and to principal later as the loan is paid down).

· Available for 30-year, 20-year, 15-year, and 10-year repayment periods.

Considerations

· Stable, predictable monthly payments.

· A fixed interest rate may be important to you if you expect to live in your home for many years or if interest rates are low.

· You can choose from various repayment periods, depending on whether you want to pay your loan off faster (and save significant interest costs) or stretch your payments over a longer term for a lower monthly payment.

InterestFirstTM Fixed-Period Adjustable Rate Mortgage

The InterestFirst Fixed-Period Adjustable Rate Mortgage (ARM) offers you the opportunity to make lower monthly payments than with standard fixed-rate products for a predetermined number of years during which you pay interest only.With the InterestFirst Fixed-Period ARM, you pay only the interest due on the amount of the loan each month for the first 5, 7, or 10 years. Payments during the selected interest-only period typically are offered at interest rates lower than the standard 30-year fixed rate. At the end of the 5-, 7- or 10-year fixed-rate interest-only period, the interest rate begins to adjust annually, and you make fully amortizing payments for the remainder of the term.This mortgage may be ideal if you are purchasing a new home, but plan to be there for a relatively short time, or if you prefer a lower monthly payment in order to use the cash flow difference more effectively elsewhere.Loan Features· Interest-only payments are required for the first 5, 7, or 10 years, depending on the term selected. · Two commonly used ARM indices, the one-year LIBOR or the one-year Treasury, generally are used to calculate annual adjustments in the interest rate after the fixed interest-only period. · At the end of the interest-only period, monthly payments change to include re-payment of principal as well as interest. Principal payments are allowed without penalty and are reflected in a reduced interest payment in the next monthly payment during the interest-only period. · The loan begins to amortize after the fixed-rate interest-only period and is fully repaid at the end of the balance of the loan term (25, 23 or 20 years).Considerations· The InterestFirst Fixed-Period ARM offers lower monthly payments during the interest-only period than standard fixed-rate or adjustable rate mortgage products. · By making a lower payment, you have greater control over your cash flow and can use or invest the difference as you choose. · Loan payments made after the interest-only period may be higher than would be the case with a typical adjustable or fixed-rate loan.ExampleHere is a hypothetical example:· $100,000 purchase price · 20% down payment · 1% origination fee (including prepaid interest) · 30-year interest only ARM (5/25 program) · Interest only payments for the first five years and principal and interest payment for the remainder of the term, based on a 25-year amortization schedule · 6% initial interest rate (based on a fully indexed rate of 6.75%) · 2 percentage point cap per adjustment; 6 percentage point cap life of loan adjustments · 6.36% APRThe interest rate and APR shown are examples only and are not intended to represent actually available terms.InterestFirst is a trademark of Fannie Mae.

Interest Only Fixed Rate

The InterestFirst Fixed-Rate Mortgage is a 30-year fixed-rate mortgage loan that offers you the opportunity to make lower, interest-only payments for the first 15 years. At the beginning of year 16, the monthly payments change to include principal as well as interest to fully amortize the loan over the remaining 15 years of the mortgage term.Your interest rate remains fixed for the entire term of the loan.With the InterestFirst Fixed-Rate Mortgage, you pay only the interest due each month for the first 15 years. Principal payments are allowed without penalty, and, if made during the interest-only period, will be reflected in a reduced interest payment due in the next monthly payment made during the interest-only period.This mortgage may be ideal if you want the stability of a fixed rate over the entire life of the loan, but with lower monthly payments than a standard 30-year mortgage during the interest-only period. For example, with a 30-year fixed-rate InterestFirst loan at 8% on a loan amount of $200,000, the monthly interest-only payment during the first 15 years is approximately $134 lower than the monthly principal and interest payment for a fully amortizing 30-year fixed rate product at 8% on the same loan amount. You choose how to use the monthly cash flow difference each month: you can invest in other financial products, pay down the principal balance of the loan and reduce subsequent monthly payments, or pay down other debt. In short, you have greater control over your cash flow.If you expect to be in your home for less than 15 years, you may want to consider an InterestFirst Fixed-Period Adjustable Rate Mortgage, which has payments based on a low, fixed rate for the first 5, 7, or 10 years, after which the interest rate adjusts annually and you make fully amortizing payments.Loan Features· Interest-only payments are required for the first 15 years of the loan. · Monthly payments increase after 15 years to include repayment of principal as well as interest. · The loan is fully amortized over the remaining 15 years and is thus repaid at the end of the entire 30-year term.Considerations· The InterestFirst Fixed-Rate Mortgage offers lower monthly payments during the interest-only period than a standard 30-year fixed-rate loan. · By making a lower payment, you have greater control over your cash flow and can use or invest the difference as you choose. · Payments after the interest-only period may be more than would be the case with a typical fixed-rate loan.ExampleHere is a hypothetical example:· $100,000 purchase price · 20% down payment · 1% origination fee (including prepaid interest) · 30-year fixed-rate · 15 years of interest only payments and 15 years of principal and interest payments based on a 15-year amortization schedule · 8% interest rate · 8.096% APRThe interest rate and APR shown are examples only and are not intended to represent actually available terms.InterestFirst is a trademark of Fannie Mae.

Reverse Mortgage

Reverse mortgages offer seniors the ability to retain their personal and financial independence. Unlike a traditional mortgage that you make payments on each month, reverse mortgages provide payments to you—in effect "reversing" the direction of the mortgage payments.Reverse mortgages enable senior homeowners to access the money they have built up as equity in their homes. The loan is repaid when you move, transfer ownership in your property, or upon your death. You still must pay your real estate taxes and homeowners insurance in a timely manner and maintain your home in good condition.The Home Equity Conversion Mortgage (HECM), created by the U.S. Department of Housing and Urban Development (HUD), is a federally-insured loan that can be used by senior homeowners age 62 and older to convert a portion of the equity in their homes into cash proceeds, which you can choose to have distributed to you in a number of ways: · Tenure (monthly payments as long as you occupy the property); · Term (monthly payments for a specified time period); · Line of credit (to draw on as you wish); · Modified term (a term plan combined with a line of credit); or · Modified tenure (a tenure plan combined with a line of credit).When your home is no longer your principal residence—when you sell the property, convey title, do not occupy the property for 12 months, or die—you or your estate will owe the loan balance or the market value of your property, whichever is less. The loan generally is repaid through the sale of the property, although that is not required. Any sales proceeds in excess of the amount owed the lender belong to you or your estate.Loan Features· You, and any of your co-borrowers, must be at least 62 years old and either own your home free and clear, or have a relatively low remaining mortgage balance and occupy the property as your principal residence. You must pay off any remaining mortgage balance at closing (the amount can be financed as part of your HECM). · Counseling, by a HUD-approved housing counseling agency, is required before your HECM application can be processed. · The maximum amount you can borrow ("principal limit") is based on a formula that considers the age of the youngest borrower, the maximum claim amount, and the expected average mortgage interest rate. The maximum claim amount is the lesser of the appraised value of your house or the maximum loan amount that can be insured by the FHA for residences in the area in which you live.Considerations· With a HECM, you can tap your home equity and receive your loan proceeds according to a payment plan that you select. · No repayment is required until your home is no longer your principal residence.