If there’s one Nevada mortgage broker that’s trusted and proven, it’s Mann Mortgage, a leading name in Reno mortgages. And to get you started on the path to home ownership, Mann Mortgage, your source for loans in Reno NV, wants to provide you with as much guidance as possible on Reno mortgages so the company has created a complete website, which includes an explanation of the most common financing methods for Reno mortgages: fixed rate mortgages, balloons, and adjustable rate mortgages.
To make the decision that’s right for you, according to Mann Mortgage, your Nevada mortgage broker, here’s what important to know about each type:
Fixed Rate Mortgages
Your leader in Reno mortgages explains that the interest rate on a fixed rate mortgage remains fixed for the life of the loan and monthly payments of principal and interest payments never change.
The most common fixed rate terms include the 30-year term and 15-year term. In general, the shorter the term, the lower the interest rate and the higher the principal and interest payment. Therefore, the interest rate on a 15-year term loan is lower than the rate of a 30-year term loan, however, the principal and interest payment on a 15-year term is higher than the payment on a 30-year term.
Distinction between 15-year fixed term and 30-year fixed term
- Interest rates for a 15-year term are slightly lower than rates for a 30-year term.
- Interest costs are significantly reduced for a 15-year term due to the lower interest rate and shorter loan term. Equity builds faster in a 15-year term than in a 30-year term.
- Principal is paid down quicker in a 15-year term resulting in faster equity growth.
- Monthly principal and interest payments are higher in the 15-year term, and as a result, your qualifying loan amount will be less than a 30-year term.
· Mann Mortgage, your Nevada mortgage broker, explains that balloons are short-term Reno mortgages that contain features similar to fixed rate mortgages. Typically, the balloon is a short-term loan, however, the monthly payments are calculated using a 30-year term. Such payments remain unchanged for a predetermined period, at the end of which, a lump sum payment is due to pay off the remaining principal balance of the loan. This larger payment is the “balloon” payment.
· In general, says your Nevada mortgage broker, borrowers sell or refinance before their balloons are due. Most balloon loan programs offer options to convert to a fixed rate at the end of the loan term. For example, a 7/23 balloon mortgage gives the borrower the option to convert to a fixed rate program (for a nominal fee) after the initial term (7 years) is over. If the conversion feature is used, the interest rate for the remaining term of the loan (23 years) will be adjusted once to reflect market conditions, then remain fixed for the remainder of the loan term. To qualify for the option, the borrower must typically still be an owner-occupant, have no previous late payments, and have no liens against the property. Other conditions may apply.
Adjustable Rate Mortgages
Adjustable-rate mortgages (ARMs) became popular in the early 1980s when interest rates were much higher, explains Mann Mortgage, your Nevada mortgage broker. When lenders were offering fixed rate mortgages at 15 percent to 16 percent, over 60 percent of homebuyers chose ARMs with interest rates starting at 12 percent to 13 percent. Currently, with low fixed rates, most lenders reported that fewer than 15 percent of homebuyers were financing their homes with ARMs.
