Hawaii Home Mortgages: What's Out There?
Lenders offer borrowers fixed-rate mortgages with a choice of several repayment periods. These loan programs have the same interest rate for the life of the loan and monthly payments (principal and interest) that never change. If you escrow your property taxes and insurance, those expenses can change, which will affect your monthly payments. Fixed-rate mortgages may be a good choice if you plan to stay in your home for a long time or if you feel more comfortable knowing your payment cannot change.
They also offer a fixed rate product with an interest-only option. This allows you to pay interest only during this initial period. After the interest-only period the loan will fully amortize over the remaining loan period. This option will be more costly as you are paying interest on the total loan amount for the interest-only period. Additionally, if you have mortgage insurance, you will pay mortgage insurance for a longer period of time. Finally, the principal balance will not be reduced unless you pay more than interest only amounts during the interest-only period.
Adjustable-Rate Mortgages (3/1, 5/1, 7/1, and 10/1 ARM Programs)
An ARM is a mortgage in which the interest rate and payments are adjusted periodically based on a pre-selected index. Subject to certain limitations, the rate and payments on an ARM loan rise and fall with the market.
3/1, 5/1, 7/1, and 10/1 ARMs allow you to pay a lower introductory interest rate than many fixed-rate mortgages offer. Your interest rate and payment are fixed for the initial fixed rate period of 3, 5, 7, or 10 years, depending on the program you select. After the initial fixed period, your interest rate and payment will follow the movement of the index up and down, with certain limits. ARMs are among the most popular loans because they help you qualify for a larger home, there is no negative amortization, and your loan may be assumable after the fixed rate period of the loan. An interest-only option is available for these products. It is important to note that with an ARM, you may have a substantial increase in payment after the fixed-rate period and the interest rate over the life of the loan can typically increase five to six percentage points above the initial interest rate.
The Federal Housing Administration (FHA) insured loans offer many benefits, including lower costs, smaller down payments, easier qualification, and more protection to keep your home.
The FHA Renovation Loan Program provides you with the money to purchase a home and renovate it, all with one convenient loan. This program is ideal for purchasing foreclosures and improving their value with needed repairs and upgrades.
VA Mortgage Loan Program
The VA loan program can make it much easier for veterans to secure a home loan by requiring little or no down payment. This home loan is available to veterans and guaranteed by the U.S. Veteran's Administration, and it frequently offers lower interest rates than ordinarily available. In addition, with a VA-guaranteed loan, there is no private mortgage insurance requirement.
Government Sponsored Entities, Fannie Mae and Freddie Mac, new conforming-jumbo loan limits make it easier and more affordable for more buyers to "move up" and purchase higher-value homes, or save substantially by refinancing their jumbo loan. Lower FICO score and down payment requirements, lower-than-jumbo rates, and loans amounts of up to $729,750 in some areas create a powerful alternative to a traditional jumbo loan.
State and Local Bond Programs
Many municipalities have established bond programs to help first-time home buyers with down payment assistance, obtaining a lower rate, and qualifying more easily for a home loan.
Lenders offer a variety of programs with competitive rates and beneficial features. Fixed rate, adjustable rate, and interest-only payment options are available. They also provide jumbo and super jumbo loans for investment properties and second homes, as well as cash-out refinancing.