Getting Approved is Only a Phone Call Away

It’s the most important long-term commitment you will make. The loan process is complex and trying to do it alone can be risky and overwhelming.  Protect your financial future.  Contact a professionally trained and certified loan originator at Marvasti TianVan Group, today.  They will find the best financing option for you!

Approved Mortgage loan application with house key and rubber stamp

Fixed-rate versus Adjustable-rate: Which to choose?

If you are planning to buy a home one day, you will likely need to finance the purchase by taking out a mortgage. The two types of primary mortgages are fixed-rate and adjustable-rate (ARM). It is important to understand the distinction between the two to choose which best suits your needs. Each has its pros and cons and can affect you financially for years to come.

With a Fixed-Rate mortgage, the interest will remain the same for the life of the loan, either 15 or 30 years. While there are many factors that can affect your rate at time of purchase, the rates offered are driven by the current market and can change daily. The pros of a fixed rate are that your payments are determined and remain the same. This option is favored by buyers who are looking to stay put long term, since it makes budgeting easy. Some cons include higher monthly payments if your initial rate is high and for the sake of stability sacrificing lower monthly payments that ARMs offer. Refinancing is also an option if rates fall.

An Adjustable-Rate mortgage means payments are initially the same for a period but change annually after that. Buyers who are looking for short term solutions will likely prefer this option. The advantage here is that initially lower interest rates are offered, so your monthly payments will be low for a period. If rates fall from the initial rate, your payments can also see a decrease. The con in turn is, if rates rise, so will your payments. There are caps however that limit how high or low the rate will go during the life of the loan. This option may not work for you if you don’t like risk or uncertainty. Also, it is important to note you may not be able to sell your home before interest rate adjustments take effect.

Loan types: Conventional, FHA and VA

Conventional Loans are issued by lenders and meet the requirements of Fannie Mae and Freddie Mac. They are not backed by any government agency, such as the Federal Housing Administration (FHA). Most of these loans are issued by private lenders and come with Fixed rates or Adjustable rates. They can be used to purchase either primary or investment properties and typically require 5% - 20% down payment with a qualifying credit score. Buyers with good credit score easily qualify for a conventional loan. PMI is required for loans with less than 20% down payment.

FHA Loans are easier to qualify for because they allow for lower credit scores and down payments, as little as 3.5% of purchase price. They are issued by federally qualified lenders and backed by the FHA. They are an attractive option for first time home buyers and those with less than 20% down. These loans do require mortgage insurance regardless of the down payment.

The VA Loan is a type of mortgage issued by federally approved lender and guaranteed by the US Department of Veterans Affairs (VA). The program was created to help service members purchase homes without requiring a down payment or great credit. Some other highlights include no PMI, competitive interest rates and easy qualification.

…Getting Approved Is A Phone Call Away