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Types of Loans

Which mortgage is right for you?

Whether you’re buying a new home or refinancing, the mortgage you choose must be compatible with your budget and financial goals.

So, take a look at the following mortgage loan types to learn more about which one best fits your needs.

 

Fixed Conventional Loans

A Fixed Conventional Loan offers a fixed rate of interest and fixed payment over a set period of time. For example:

With a 30-Year Fixed Conventional Loan payments are calculated over a 30-year period and will have the lowest monthly payments of all the fixed-rate programs. Because the loan is paid back over 30 years, it will also have the highest long term interest costs of the fixed-rate programs if the loan is kept for the entire 30 years.

With a 15-Year Fixed Conventional Loan payments are calculated over a 15-year period resulting in a slightly higher monthly payment than the 30-year loans. The lower interest rate in addition to the shorter payment term of the loan will result in long-term interest savings.

 

ARM (Adjustable Rate Mortgage) Loan

An ARM is a loan with a fixed interest rate for an initial period, after which the rate is then adjusted periodically. It also allows the lender to adjust the interest rate in accordance with a specified index and margin periodically, as agreed to at the inception of the loan.

The first number (initial period) for an ARM will tell you how long the interest rate on the loan will remain the same before it changes. The second number (subsequent period) will tell you how often the interest rate will adjust. For example, a 5/1 ARM means the interest rate you see will remain the same for the first 5 years of the loan and will then change every year after that.

Typically, an ARM has a lower initial interest rate than a fixed-rate mortgage loan, but after the initial period, your interest rate and monthly payment will increase if interest rates rise.

 

Balloon Loan

Balloon mortgage loans are short-term fixed-rate loans with monthly payments for a set number of years followed by one larger final ‘balloon’ payment for the balance of the mortgage. Typically, the balloon payment will be due at the end of 5 or 7 years.

Once this term is up, these loans will offer the option to refinance or extend the loan at market rates.

 

Jumbo Loan

A mortgage which is larger than the legislated purchase limits of Fannie Mae and Freddie Mac (currently $424,100).

 

FHA (Federal Housing Administration) Loan

A mortgage which is partially insured by FHA, usually assumable, and may have reduced down payment requirements compared to conventional mortgage.

 

First Time Homebuyer Program (NIFA)

A mortgage loan program also know as NIFA (Nebraska Investment Finance Authority) which is administrated by the state of Nebraska and provides mortgage loans with less stringent down payments and lower rates for first time home buyers.

 

VA (Veterans Administration) Loan

A mortgage where the Veteran’s Administration provides assistance to veterans of the United States Armed Forces by partially guaranteeing loans to veterans with low or zero down payment.

 

USDA Rural Development (RD) Loan

A mortgage loan program administered by the USDA that provides low- and moderate-income households the opportunity to own adequate, modest, decent, safe, and sanitary dwellings as their primary residence in eligible rural areas.

 

Bridge Loan

A short-term loan used to provide funds to close on another residential property when the current property has not yet closed. Find out more

 

Home Equity Loan

A mortgage loan that uses the equity in your home to finance home improvements, consolidate debt and much more. Find out more

Cami Moran, Loan Originator NMLS #597433
Lincoln Federal Savings Bank of Nebraska
5705 S. 86th Drive, Lincoln, NE  68526
Direct:  (402) 474-4200 Ext. 351
cmoran@lincolnfed.com
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