Confirming loans represent a large majority of all loans originated today. Conforming loans are those which represent the average buyer with good credit scores and a down payment of 5% or more. (Credit scores over 640 are usually one of the minimum requirements for these loans.) The maximum loan amount for a Conforming Loan is $417,000.

Most conventional loans are sold to Federal National Mortgage Association (a.k.a. Fannie Mae) or the Federal Home Loan Mortgage Corporation (a.k.a. Freddie Mac). Their guidelines establish the underwriting criteria for making the loans that investors purchase on the secondary market.

Non-conforming loans generally fall into one of two categories. The first is a JUMBO loan. This is for loans over the conforming limit of $417,000 . The underwriting criteria is similar to conforming loans, but they carry a higher interest rate due to the slightly higher risk (in dollars) they represent.

The second type of Non-Conforming Loan is for situations where the credit scores or debt-to-income ratios do not fall within the Conforming Loan guidelines. If you have had credit problems in the past, you may still qualify for a loan, but the interest rate may be slightly higher. In such circumstances, the credit decision is based on a variety of factors including credit scores, credit history, employment history, income stability, debt ratios, reserve assets, source of down payment funds and other factors. As a result of these factors, the interest rate increases, depending on the amount of additional risk. One of our Mortgage Specialist will be glad to assist you and review your options.

This type of loan is considered the industry standard. The loan payment is fixed and options include:

30 Years     20 Years     15 Years     10 Years

The shorter terms have higher payments, but build equity much faster. The 20 year rate is usually very close to the 30 year rate, and the 15 year rate is usually the same as the 10 year rate. Generally speaking, the interest rate on a 30 year loan is about 1/2% higher than a 15 year loan. Feel free to ask one of our Mortgage Specialists to show you payment and amortization comparisons of different loan terms or use our convenient MORTGAGE CALCULATOR and TODAY'S RATES features to make your own comparisons.

Adjustable Rate Mortgages offer advantages in certain situations that could save you thousands of dollars and allow you to qualify for a larger home. Homeowners who plan on staying in a home for less than 7 years can save substantial amounts of money by choosing an ARM over a 30 year fixed rate. Although it is sometimes difficult to know exactly how long you might live at a particular home, it is an alternative that deserves careful consideration. Some factors to consider are when deciding on an adjustable rate mortgage are the:

INDEX     MARGIN     START RATE     CAPS

INDEX - Some indices are more stable and others are a little more volatile. The LIBOR (London Interbank Offered Rate) COFI (11th District Cost-of Funds Index) are historically slower moving indices than the 1 Year Treasury Bill. Since the LIBOR and COFI indices move more slowly, the annual interest rate changes are often smaller. These loans do not go up as fast in an increasing interest rate environment. Many consumers like the added stability the LIBOR and COFI programs offer. On the other hand, in a high interest rate market, the T-Bill index is likely to move down more quickly. Another index used is the 12 month Treasury average (MTA-12). Since it is an average of the previous 12 months, it also moves very slowly.

MARGIN - Margins can vary from 1.375% to 3.0%, depending on a variety of factors including the length of the initial fixed rate period, the down payment, the index and the annual/lifetime caps. The formula for determining the interest rate after the initial fixed period is:

INDEX + MARGIN = RATE

If the Index for a loan is 2.75% and the Margin is 2.25%, after the initial fixed period the new rate would be adjusted to 5.0%. If you plan on keeping your ARM for an extended period after the initial start rate, the lower the margin, the lower the interest rate.

INITIAL TERM - There are a variety of terms available for ARMs. They are usually listed with the fixed period first, them the frequency of adjustment. For example, a 7/1 ARM is fixed for the first 7 years, then adjusts every year thereafter. The most common types are:

7/1     5/1     3/1     1/1

Just like standard fixed rates, the longer the period is fixed, the higher the risk to the lender and the higher the interest rate (although they are almost always noticeably lower than the current 30 year fixed rate).

Another popular type of Adjustable Rate Mortgage is sometimes referred to as a "two-step" loan. This type of loan is also referred to as a "Balloon Note." They have a fixed period similar to the examples above, but instead of adjusting annually, they only adjust one time for the life of the loan. The most common types are:

5/25     7/23

At the end of the fixed payment term, the loan would convert to the current fixed rate at that time plus .375%. They are called Balloon Notes because the loan can be called due if certain basic requirements (timely payments, etc.) aren't met during the last 12 months of the first fixed term of the loan. Please call one of our Mortgage Specialists for more detailed information.

CAPS - Annual caps tell you how much your interest rate can vary after the initial fixed period ends and how much your lifetime cap will be. Caps are generally quoted as follows:

2/6     2/5     1/5

The first number indicates the annual interest rate cap and the second number represents the lifetime interest rate cap (over the start rate). 2% annual caps are most common. The life cap may vary, depending on the start rate. The lifetime cap is calculated by adding the lifetime cap to the initial start rate.

One variation on interest rate caps is when three numbers given as caps. An example would be a program that has 5/2/5 caps. In this case, the first number indicates how much the rate can adjust the first year after the fixed period; the second number is the maximum adjustment for any year following the first adjustment period; and the final number is again the lifetime cap. This is not uncommon on loans that have longer fixed rate terms (like the 7/1 programs) before they adjust.

PUTTING IT ALL TOGETHER - Naturally, everyone wants the lowest start rate, the lowest caps, the lowest margin and the most stable index. And, as might be expected, there are always trade-offs. The lowest start rate is likely to have either a higher lifetime cap or a slightly higher margin. One final factor, there are pre-payment penalties on some ARMs. Be sure you ask about this, especially if you plan on moving within 2 or 3 years.

If you would like to review current rates and programs to determine which loan might be best for your situation, please feel free to contact one of our Mortgage Specialists for information at 770-509-7827 or visit our TODAY'S RATES section.

Our rates and fees are low. Our expertise is FREE.

Interest only loans are adjustable rate mortgages with an initial fixed rate period during which time the only payment required is simple interest on the outstanding loan amount. The interest-only period typically varies between 3 and 10 years. Once the "interest-only" period ends the loan becomes a fully amortizing loan over the next 15 to 25 years. The advantages of this type of loan include:

· Improved Cash Flow Management
· More flexible payment options
· Better allocation opportunities for investments
· Qualifying for a nicer home
· Higher return on investment (ROI) on your home equity

An interesting program now available empowers you to choose the payment option you prefer. On this type of loan you can choose one of the following options:

1.) Minimum Payment (determined by the lender, may have negative amortization)
2.) Interest Only (no deferred interest/negative amortization)
3.) Principle and interest for a 30 year program
4.) Principle and interest for a 15 year program

The benefits of this loan are similar to those of the interest only loan, with even greater flexibility. You have the option each month on which payment you prefer to make. During emergencies, holidays or any situation where a little extra cash can help, this loan can be a big asset to aid with cash management.