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