Getting the right type of real estate home loan is an important part of the home buying process. Once you know how much you can afford, you can begin looking at how different mortgage products affect how much home you can buy.  In this section of my web site I have put together some basic information regarding the types of real estate home loans that are common in the market today.  To help you with all of the jargon associated with real estate and mortgages, check out my Real Estate Dictionary. 

For more information and to get help calculating your specific situation, please contact me , or fill out the form below.

Fixed-rate mortgages
This is the traditional method of financing a home.  Fixed rate mortgages are mortgages where the interest rate stays the same for the entire term of the loan - usually 15 to 30 years.

The advantage to a fixed rate mortgage is that if you lock a relatively low rate, your payment won’t go up when rates do.  Your payments are stable and predictable, but initial interest rates tend to be higher with a fixed rate than with an adjustable rate.

Variable or Adjustable-Rate Mortgages (ARM)
With an adjustable rate mortgage, the rate of the loan can change throughout the term of the loan. The interest rate on an ARM is linked to a financial index, such as a Treasury Security, causing the interest rate to fluctuate with market conditions. Many ARMs have a short fixed period and then become truly adjustable.  The rate of the loan is based on adding points to a fixed base.  Many ARMs have a lifetime cap on the interest reate increases to protect the borrower.

The advantage to an ARM is that it offers lower initial payments and this makes it easier for buyers to qualify.  Some ARMs may be converted to Fixed Rate Mortgages at specified times, usually within the first five years.

Balloon Real Estate Loan
A balloon loan is a real estate loan where there is a lump sum due at the end of the loan.  This normally encourages an individual to refinance prior to the end of the term of the loan.

Hybrid loans A hybrid loan combines a fixed period along with an adjustable component. Usually these loans are fixed for a period of time and then the loan becomes adjustable where it is dependant on current rates.

FHA real estate home loans An FHA loan is a loan in the United States that is insured by the Federal Housing Administration.

VA real estate home loans A VA loan is a loan in the United States guaranteed by the Veterans Administration. The loan may be issued by qualified lenders. The VA was designed to offer long-term financing to American Veterans or to their surviving spouses.

If you would  like to receive more information about loan programs in Bolingbrook, Frankfort, Lemont, Lockport, Manhattan, Mokena, New Lenox, Orland Park, Romeoville, Woodridge and surrounding Cook, DuPage and Will County areas, then please fill out the following form below or contact me today.