Which loan product is the best for You?

We can help you decide.

Please note that although most types of loans are available in most areas, some may not be offered in the area where you are buying a home.

There are many types of mortgage programs available. The right type of loan for you depends upon several factors:

• Your current financial situation
• How you expect your finances to change
• How long you intend to keep your home
• How comfortable you are with the possibility that your mortgage payment may rise in the future

	Features	Recommended For
Fixed Rate Mortgage	Monthly principal and interest (P&I) payments that stay fixed for the entire life of the loan	Borrowers who prefer regular payments with no surprises
	Protection from rising interest rates	People with limited or fixed incomes
		People who plan to stay in their homes a long time
		People who are refinancing at a time when interest rates are comparatively low
Adjustable-Rate Mortgage	Interest rate that is fixed for an initial period, then adjusts periodically based on market conditions	People looking for lower monthly payments in the short term
	Lower initial rate than with a fixed-rate mortgage	People who plan to move or refinance again within a few years
	A variety of fixed-period options
Jumbo Loans	Mortgage amounts in excess of the conforming loan limit1 set by Fannie Mae and Freddie Mac	Homeowners who need to refinance a property with a higher appraised value and can handle larger monthly payments
	Also known as nonconforming loans
	Typically carry higher interest rates
Lender-Paid Mortgage Insurance Option	Bypasses mortgage insurance costs when your loan-to-value ratio is more than 80%	Homebuyers without enough cash for a 20% down payment
		Homeowners who plan to move or refinance within ten years
VHDA	Minimal or No down payment requirements	First time homebuyers with little or no down payment
	Flexible income, credit and debt guidelines.
FHA Loan	Low down payment requirements	First-time and repeat homebuyers
	Flexible income, debt, and credit requirements	Homebuyers with limited funds for down payment
	Down payment and closing costs may be funded by a gift or grant	Homebuyers with less than perfect credit
		Homebuyers who need a non-occupant, co-borrower
VA Loan	No down payment required	Eligible military service members (may include veterans, reservists, active-duty members)4
	Flexible income, debt, and credit requirements	Eligible homebuyers with limited funds for down payment
	Down payment and closing costs may be funded by a gift or grant	Eligible homebuyers with less-than-perfect credit
FHA Streamline Refinance	Reduced documentation requirements	Current FHA mortgage holders who want to:
	Less processing time than a full FHA refinance	Reduce monthly payments by refinancing to a lower interest rate
	Closing costs may be financed	Refinance as quickly and conveniently as possible
VA Interest Rate Reduction Refinance Loan (IRRRL)	Reduced documentation requirements	Current VA mortgage holders who want to:
	Less processing time than a full VA refinance	Reduce monthly payments by refinancing to a lower interest rate
	Closing costs may be financed	Refinance as quickly and conveniently as possible
FHA 203k	Allows borrowers to finance repairs and or improvements	Borrowers that would like to purchase or refinance a home while doing improvements to the property
Reverse Mortgage	A reverse mortgage is a special type of loan that allows you to utilize the equity in your home and receive tax free cash, monthly income, and/or a cash credit line. A reverse mortgage may also be utilized to purchase a new home.	How much money you qualify for is based on your age, the value of your home, and the program you select.

When considering loan programs, the first decision is usually whether you prefer a fixed-rate mortgage or an adjustable-rate mortgage (commonly referred to as an ARM).

For example, a 5-year ARM will have a lower initial payment than a 30-year fixed-rate mortgage, but the interest rate and payments can increase over time. The best way to find the "right" answer is to discuss your finances, your plans, your financial prospects, and your preferences with your Mortgage Professional at Old Point Mortgage, LLC.

You Can Always Plan (ahead) With a Fixed-Rate Mortgage.
A fixed-rate mortgage is the standard against which most other mortgage products are measured. Fixed-rate mortgages feature a fixed interest rate for the life of your loan (known as the term), so your monthly payments (principal plus interest) will always be the same. When choosing a fixed-rate mortgage, most home buyers choose a 30-year or 15-year term, though 10- and 20-year terms are also available. If you have a 30-year mortgage, the interest rate you pay will be locked in for all 30 years. At the end of the 30th year, if payments have been made on time, the loan will be paid off in full.

Fixed-rate loans are the most advantageous when rates are low and you plan to stay in your home for an extended period of time. Most fixed-rate loans permit you to pay the loan balance off before the end of the term with no prepayment penalty. You may also add extra dollars to your scheduled monthly payments enabling you to pay off your loan earlier. The length of the term of your fixed-rate mortgage affects both the monthly payment on the mortgage and the number of years needed to pay the loan in full. As a rule of thumb, the longer the term, the lower the payment.

• 30-year fixed-rate: A 30-year fixed-rate mortgage provides the borrower with a fixed rate for the entire 30-year term of the loan. With this loan, the borrower will pay the loan in full if he or she makes the required principal and interest payment for 30 years. The primary benefit of a 30-year fixed-rate versus other fixed-rate loans is that the payment is the smallest since the term is the longest.


• 20-year fixed-rate: You can shorten your mortgage term by 10 years and usually get a lower interest rate with the 20-year mortgage. Another advantage with the shorter term, besides paying your loan off sooner, is that you'll also build more equity in your home sooner than you will with a 30-year loan. Your monthly payments will be higher, however, compared to a 30-year fixed-rate mortgage.


• 15-year fixed –rate: This loan term has the same benefits as the 20-year term (i.e., quicker pay-off, faster equity build-up, lower interest rate), but you will also have a higher monthly payment.

*Longer loan terms may now be available. Ask your mortgage professional for more information.

What's an ARM, and Why Would You Want One?
Adjustable-rate mortgages (also called ARMs) have a unique interest-rate feature that allows changes or adjustments to the interest rate over the life of the loan. An ARM may be attractive to you if you desire a slightly lower interest rate during the initial stages of owning your home when compared to a fixed-rate loan. If you expect that your income will rise in the future, or if you are not planning to stay in the same home for long, an ARM may be right for you.

How often your interest rate adjusts is determined by the term of the loan. You may choose a 1-year, 3-year, 5-year, 7-year, or 10-year ARM term, or even some other term. There is usually an initial period of time during which the rate won't change. This might be anywhere from six months to several years. For example:

• A 3-year ARM would mean the initial interest rate would stay the same for the first three years and then would adjust each year beginning with the fourth year.

• A 7-year ARM would mean the initial interest rate would stay the same for the first seven years and then would adjust each year beginning with the eighth year.

In addition, most ARM loans have annual and lifetime "caps." A cap is the maximum amount by which a payment or a rate can increase. For example, the interest rate on an ARM loan with 2% annual caps cannot increase by more than 2% per year. An ARM loan with a 6% lifetime cap can never have a rate higher than 6% over the starting rate, and so on.

Most adjustable-rate loans can be refinanced easily if the rate on the loan rises. That fact can offset some of the interest rate risks associated with an ARM. Ask your Mortgage professional for more details. 

A Balloon Mortgage Is Just What It Sounds Like.
Like an adjustable-rate mortgage, a balloon mortgage offers an initial interest rate that is lower than a fixed-rate mortgage. The rate stays low during the initial years of the loan until a final balloon payment is due at a set date in the future. The balloon payment pays off the entire balance.

The most common balloon loans are 5-year or 7-year balloons that offer low rates for either five or seven years before the balloon payment is due. If you plan on either selling your home, paying it off, or refinancing it before the balloon payment is due, or if you are expecting a large lump sum of cash in the future, then this type of mortgage may make good financial sense.

Need Another Mortgage Product?
Many home buyers simply don't have a down payment or haven't yet established a strong credit history. To accommodate the needs of these mortgage borrowers, most Mortgage Professionals offer mortgage alternatives that have proven attractive and affordable for home buyers over the years. Some of these are described below.

 FHA (Federal Housing Administration) Loans
FHA loan programs help low- and moderate-income families become home owners by lowering some of the costs of their mortgage loans. FHA loans are also a good fit for borrowers with past credit problems or limited resources for a down payment. Underwriting guidelines are more lenient than with other loans, such as conventional loans. The most popular FHA loan has a minimum cash investment requirement of 3.5%, but permits 100 percent of the money needed at closing to be a gift from a relative, nonprofit organization, or government agency. FHA also allows you to perform a "streamline" refinance when rates go down to lower your interest rate. This program is inexpensive and easy to execute. Ask your Mortgage Professional about the streamline refinance option available to FHA borrowers. 

VA (Veteran's Administration) Loans
For active-duty military, veterans, and reservists, VA loan programs offer low rates and low- or no-money-down options. The VA home loan program gives you the ability to buy with no out-of-pocket costs. As the VA program requires no mortgage insurance, monthly payments are frequently less than any other no-down-payment loans. The VA also offers a low-cost Interest Rate Reduction Loan (lRRL) program allowing you to refinance and lower your mortgage payment inexpensively. Finally, the maximum VA loan amount varies, so check with your Mortgage Professional for up-to-date information. 

Other Loans May Be Available!
The mortgage industry is always improving and always developing new products to help families finance homes. Ask your mortgage professional if there are other mortgage products available that may be right for you.