CENTURY 21 Affiliated Buyer's Guide

FINANCING YOUR HOME There are many types of mortgages. Choosing the type that is best for you is an important decision since this is a long-term loan commitment. The following list briefly describes various programs, but you should consult your mortgage broker for specific details: CONVENTIONAL/FIXED RATE MORTGAGE — Loans that have monthly interest and principal payments that remain constant for the life of the loan, which is usually 15 or 30 years. ADJUSTABLE RATE MORTGAGE (ARM) — Loans that allow the lender to adjust the interest rates periodically in accordance with a specified index and as agreed to at the inception of the loan. Always consider the long-term impact of changing rates. CONVERTIBLE MORTGAGE — Adjustable loans that may be converted from adjustable to fixed rate during a predetermined time period within the life of your loan. INTEREST ONLY MORTGAGE — Loan is “interest only” if only the scheduled monthly mortgage payment is made. The payment the borrower is required to make has no principal component. If the borrower pays only what is required, the principal balance of the loan will remain unchanged. BALLOON MORTGAGE — Loans with principal and interest components that do not fully repay the loan during the loan term, but instead leave a “balloon” payment at the end of the term. GRADUATED PAYMENT MORTGAGE — Flexible payment loan that begins to lower and increase gradually at a predetermined rate until leveling off after a portion of the mortgage term expires.

BI-WEEKLY MORTGAGES — Loans with payments due every two weeks, totaling 26 payments a year.

CONSTRUCTION LOANS – Short-term, interim loans that finance the costs of new-home construction.

GOVERNMENT-INSURED LOANS — Loans that are guaranteed or insured, but not funded, by the state or federal government. With these types of loans, lenders still provide the funds, but the government protects the lender against loss in the event that the borrower defaults. Types of Government-Insured Loans VA LOANS — Programs for veterans provide special home financing. FHA — Loans made through a lender that is approved and insured by the Federal Housing Administration (FHA) — These loans are designed to finance moderately priced homes, have a low down payment, and can be fixed or adjustable rate mortgages.

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