• Beth Metzger

DEMYSTIFYING MORTGAGES



Is it possible to use the words creative and mortgage in the same sentence? Resourcefulness and creativity when financing a mortgage may be an advantage when considering a home purchase. Mortgage loans can be confusing, complex, or complicated. However, there are several (often little known) options to consider. Here are a few:


Conventional / Fixed Rate Mortgage

With this type of mortgage your monthly payments won’t change over the life of your loan. This is the standard, everyday mortgage. They’re available in 10, 15, 20, 30, and 40-year terms, but 15 and 30 are the most common.

Adjustable Rate Mortgage (ARM)

There are a variety of different ARMs. The basic idea of this type of mortgage is that the interest rate changes over time throughout the life of the loan. For example: a common ARM is called the 5/1 loan - the interest rate stays the same for the first five years and then is free to change for the remaining 25 years.

FHA Loans

Guaranteed by the Federal Housing Administration, these mortgages come with built-in mortgage insurance to protect against the possibility of not being able to repay the loan. In addition, they usually come with lower interest rates, and the required down payments are typically smaller with an FHA loan.

VA Loans

Making it easier for veterans of the U.S. armed forces to buy homes, these mortgages don’t require a down payment. They also typically offer lower interest rates, don't require mortgage insurance, and are guaranteed by the Department of Veteran Affairs. If you’re a veteran, this is a really wonderful option.

Interest-Only Mortgage

Usually, during the first five or ten years, you’re given the option to pay only the interest portion of your monthly payment instead of the full payment (principle plus interest). This can be useful in a pinch, however, this does slow down your repayment time. After the interest only time period is up, the rest of the mortgage is paid off in full like a conventional mortgage.

Jumbo Mortgage

This refers to a mortgage that’s too big for the Federal Government to purchase or guarantee (anything beyond the maximum conforming loan limit). The 2019 jumbo loan threshold for Los Angles County is $726,525 and any loan above that amount is defined as a Jumbo Mortgage.


Different types of mortgage loan programs may offer buyers different interest rates and varied terms and they’re worth looking into when beginning the home buying process. I hope that you’ve found some of this information useful and will pass it along.


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Program guidelines are subject to change. Qualification is based on credit, income, and asset verification. Contact a reputable mortgage lender for details, or just call Aaron Anvaripour with Redondo Mortgage.

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© 2020 by Beth Metzger

DRE #: 02047506