There are really not as many home loan products available for current home owners or those seeking to buy a home with a mortgage as people believe there are. Basically there are two types of loans: fixed rate and adjustable rate. Fixed rate mortgages are almost always for 30 year amortization terms (360 months) with equal payments each month for the entire term. Homeowners or home buyers can also get 15 year terms, and in some cases 40 year terms. Adjustable rate mortgages (ARMs) come in more flavors. You can get a pure monthly adjustable or yearly adjustable mortgage, or you can get a fixed rate for a specific number of years after which the loan goes adjustable.

An important thing to remember about these types of home loans is that even if the broker tells you that this is a “No Fee” loan, they are making money off the spread. The larger the spread, the higher the rebate, or “yield spread premium” that the lending institution or bank pays the broker. Most of the time the broker has to disclose the amount of the yield spread premium that they are getting from the bank, but not always. There are loopholes. The best way is to ask them directly how much they are making on your loan and then try and negotiate it down. The broker has to make some money, but they should not get rich off of your deal.

If you’re challenged with your existing Mortgage, consider the Home Affordable Modification Program.

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