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FIXED RATE LOAN - A loan which has an interest rate that remains constant
throughout the life of the loan.
BUY-DOWN - A fixed rate loan where the interest rate and payment are reduced for
a specific period of time by paying the interest up front to subsidize the lower payment.
BALLOON LOAN - A fixed rate loan that is amortized over a 30 year period but becomes due and payable at the end of a certain time (usually 3, 5, 7 or 10 years). May be extendible or may rollover into another type of loan.
GRADUATED PAYMENT MORTGAGE (GPM) - A fixed rate loan which has payments starting lower than the payment on a standard fixed rate which then increase by a predetermined amount each year for a specified number of years (usually 5 to 7 years).
ADJUSTABLE RATE MORTGAGE (ARM) - A loan that has an interest rate that increases or decreases at specified times during the life of the loan. The change in the interest rate is usually tied to a financial index (I.e. Treasury Bill, LIBOR, Cost of funds, etc.) and is determined by adding a predetermined margin to the index.
FHA LOAN - FHA loans are available as a fixed rate, ARM, GPM or buydown. They are loans that are insured by the Federal Housing Administration and offer low down payments and higher qualifying ratios. There is a maximum FHA loan limit which varies from region to region.
VA LOAN - A no downpayment loan available to eligible veterans. VA loans are insured by the Veterans Administration. The maximum VA loan is currently $207,000 with no downpayment.
COMMUNITY HOMEBUYER'S PROGRAM - A fixed rate loan with a low (3% to 5% downpayment, no cash reserve requirement and easier qualifying ratios. Subject to borrower meeting income limits and attendance of a four hour training course on home ownership.
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