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Types of Loans

Thirty-Year Fixed Rate Mortgage

The traditional 30-year fixed-rate mortgage has a constant interest rate and monthly payments that never change. This may be a good choice if you plan to stay in your home for seven years or longer. If you plan to move within seven years, then adjustable-rate loans are usually cheaper. As a rule of thumb, it may be harder to qualify for fixed-rate loans than for adjustable rate loans. When interest rates are low, fixed-rate loans are generally not that much more expensive than adjustable-rate mortgages and may be a better deal in the long run, because you can lock in the rate for the life of your loan.

Fifteen-Year Fixed Rate Mortgage

This loan is fully amortized over a 15-year period and features constant monthly payments. It offers all the advantages of the 30-year loan, plus a lower interest rate—and you'll own your home twice as fast. The disadvantage is that, with a 15-year loan, you commit to a higher monthly payment. Many borrowers opt for a 30-year fixed-rate loan and voluntarily make larger payments that will pay off their loan in 15 years. This approach is often safer than committing to a higher monthly payment, since the difference in interest rates isn't that great.

Adjustable Rate Mortgages-ARM (5/1 ARM, 7/1 ARM and 10/1 ARM)

With an adjustable rate mortgage (ARM), you benefit from a lower introductory rate for a set period of time (5, 7, or 10 years), so you may be able to get more house for your money. While the rate adjusts based on one of several market indices–and may increase–an ARM may still be a good choice if you plan on moving within three to 10 years, refinancing, or believe your income will increase enough to afford a potentially higher rate after the introductory period. All programs have a "cap" that protects you from your monthly payment going up too much at once. In addition, all ARM programs have a "lifetime cap"–your interest rate can never exceed that cap amount, no matter what.

Piggy Back Loans

A piggyback loan is a second mortgage taken out at the same time as a first mortgage as a way of borrowing a higher percentage of the property cost/value without having to pay mortgage insurance. The first mortgage is typically limited to no more than 80 percent of property cost/value and therefore does not require mortgage insurance. The piggyback loan would represent 5- to 10 percent of the property cost/value.

Construction and Lot Loans

Thinking about building a new home, but worried that financing the lot and the home's construction will be a complicated process? Then think MAFCU. We can provide the financing for both in one loan package featuring:

  • One time close option.
  • Flexible draw schedule.
  • Lot purchase financing.
  • Existing property renovation financing.
  • Programs for tear downs.
  • Flexible terms to meet the needs of your custom home.

Not ready to build just yet? Opt for a lot loan alone. Ideal for borrowers who will be ready for a construction loan in the near future, this type of financing is available for a lot that is normal for the area and has at least one utility available from the street. (Septic tanks, propane tanks, are acceptable if these features are typical for the neighborhood.)


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