| There are many types of loans out there and it can | | | | ARM's, which means that a part of your loan has a |
| be very confusing. This set of tips will give you an idea | | | | fixed interest rate and another part will be flexible. |
| of the types of loans out there. Remember that loans | | | | Low Document |
| vary depending on the bank, so be sure to do your | | | | Most banks offer low document loans. They have |
| homework. | | | | significantly less paperwork. This type of loan caters to |
| Yearly Fixed Rate | | | | self-employed borrowers who are unable to provide |
| A yearly fixed rate loan is the most common type of | | | | full financial statements and other evidence of their |
| loan. You and your broker decide on your interest rate | | | | income. |
| and the years that you have to pay off your loan. | | | | Split Rate |
| Loans start at 10-years and go all the way to | | | | Split rate loans combine fixed rate loans and |
| 50-years. | | | | adjustable rate loans. They're great in times when the |
| Reduced Rate | | | | interest rates are fluctuating. The loan can be split |
| A reduced rate loan is like a yearly fixed except you | | | | many ways: 60% variable, 40% fixed or 50/50 splits |
| get a lower rate in exchange for your agreement not | | | | are most common. |
| to refinance or sell within the first five years. | | | | Line of Credit |
| No Down Payment | | | | Line of credit loans have become popular due to their |
| If you don't have a down payment, most banks offer | | | | flexibility and features. It's like a credit card: it allows |
| a no down payment option. Most states also offer no | | | | you to withdraw funds up to a set limit at any time |
| money down programs. Ask your broker what is | | | | Non Conforming |
| offered near you. | | | | Non-conforming (or jumbo) loans are for people who |
| Construction | | | | need to borrow anywhere between $417,000 and $2 |
| If you are planning on building your home, you'll need to | | | | million. These loans typically have higher interest rates |
| get a construction loan. Many banks offer interest-only | | | | and are for those with very good credit. |
| payments until your home is done. | | | | Beware of Honeymoon Introduction Rates |
| Adjustable Rate | | | | Some banks want your business so much that they'll |
| A basic adjustable rate mortgage (ARM) is like a basic | | | | entice you with low interest rates, then forget to inform |
| fixed rate loan except your interest rate will change | | | | you that these rates only last six months to a year |
| during the life of your loan. How it changes depends on | | | | then skyrocket up. Make sure that you know your |
| the going interest rates. There are also fixed period | | | | interest rate throughout the entire length of your loan. |