Mortgages – Types

As of October 3, 2015, the rules to being pre-qualified have changed. Lenders do not require you to submit all paperwork regarding your financial situation at the time of pre-qualification. You can offer to do so, and it would be to your benefit if you do, as this will speed things along once you find that home you just have to have. And, your real estate agent will be able to bring more to the negotiations offering the seller a buyer who is serious and ready to go.Example of Maximum MortgageAnnual Income           House Only 28 Percent      Total Debt 36 Percent$35,000                       $816                                        $1050

$50,000                       $1167                                      $1500

$65,000                       $1516                                      $1980

$75,000                       $1750                                      $2250

$90,000                       $2100                                      $2700

$100,000                     $2333                                      $3000

Description of Type of Mortgages


This is a contract between the lender and the borrower at the lender’s risk. Borrower’s property is security for the loan. This type is not insured by any federal insured program. Down payment normally is 20% of the loan. I the borrower’s credit is exceptional, down may be less than 20%.

FHA Mortgage

The FHA will insure the lender’s loan in case the buyer cannot make house payments. The buyer MUST carry mortgage insurance through the FHA. This mortgage insurance is figured into the monthly payment. Minimum down payment is 3.5%.

VA Mortgage

VA will guarantee mortgages offered to qualified members of the Armed Forces, active military personnel, veterans, or their widows. The down payment may be small, or none required.

Adjustable Rate Mortgage-ARM

Interest on an ARM may vary up or down at fixed intervals. This type of mortgage offers low beginning interest rates BUT the rate will go UP in time. If you are considering the ARM, be sure you know:

  • What is the adjustment period (the time between interest rate changes)?
  • What index is used to determine the interest rate?
  • Does the introductory rate differ from the normal rate?
  • What is the margin?
  • What is the period adjustment cap?
  • What is the lifetime adjustment cap?

Mortgage Terms To Know

Closing Costs


Homeowner’s Insurance

Points (1%)


Private Mortgage Insurance
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