Types of Real Estate Mortgages | Maine Home Connection
Maine Home Connection
Home Home About Us About Us Contact Us Contact Us
MHC MHC MHC MHC MHC MHC
Buyers Sellers Stats Maine Blog Properties
Explore Communities
Search All Properties
Lifestyle Home Search Map
Your Home's Value
Waterfront Real Estate
Relocation Services
Featured Listings
Home Finance & Mortgage
Retirement in Maine
Real Estate Investing
Video Library
Featured Properties
Enter a keyword to search the site

Features & Services
  
Your Home's Value
My Home's Value:
Receive a Report of  Your Home's Value 
New ConstructionNew Construction: 
Guidelines, Builders, Green Homes
Your Home's ValueMarket Conditions:
Current Home Sales Reports & Statistics 
Sold PropertiesSold Data:
View All Recent Home Sales History
Left-MarketingHome Marketing:
Maximum Exposure© Home Marketing 
  
...Manage Your Account
  
Login
Existing Users:
Login with your email address only
Existing UsersNew Users: 
Simple signup to view   all Maine properties.
Contact Us
Contact Us:  
Call or email us with your questions.
  
Newsletter Signup
 


Maine Mortgage Information

Mortgage & Loan Options 

Mortgage OptionsThere are almost two hundred different mortgage options available, but once you examine them you will quickly realize that there are only really six or seven basic types. It's just that in today's personalized banking world, lenders try to offer products that are tailored to a client's specific financial concerns or needs.

Choosing the right mortgage depends on several different factors, including your current monthly income, your future expected income, current assets, and liabilities.

Other factors might include whether you intend to pay points up front, or over the life of the loan? Are you interested in an adjustable rate or more comfortable with a fixed rate? What is the time frame you intend to live in the home - if it's only 3 to 5 years you might want to consider a 5/25 or 7/23 mortgage.

In any case, its important to understand the options that are available. Below is a review of some basic mortgage types:

Fixed-Rate Mortgage

The oldest and most popular variety, a fixed-rate is constant through the life of the loan, and can be taken out in 10, 15, 20, and the most popular 30-year lengths.

Adjustable-Rate Mortgages (ARM)

ARM loans have interest rates that fluctuate and are linked to one-year Treasury bills or another specific index. The initial rate is low, but grows each year. There is usually an initial yearly cap of two points, and also a lifetime ceiling cap of approximately six points. The rate can also drop.

Two-step mortgages usually called 5/25s and 7/23s

These types of loans are normally available in two varieties: convertible (which converts the loan to a fixed loan for the remaining 25 or 23 years) and nonconvertible (which converts the loan to an ARM). Both are 30-year loans with fixed interest rates for the first 5 or 7 years, then change to convertible or nonconvertible loans for the remainder. Both loans can be amortized over the 30 years. They're considered riskier than fixed-rates, but less risky than ARMs during the first 5 or 7 years.

FHA Mortgage

FHA loans incorporate pre-set spending limits. The amounts are set by the median prices of different cities within a particular area. FHA loans can be obtained with only a 5% down payment and in some cases only 3%. However, a steep mortgage insurance premium and other upfront costs are required.

VA loans

VA loans are designed to help military veterans purchase homes with no down payment. Also, veterans aren't allowed to pay points, although they are responsible for some fees. This peculiarity is sometimes a problem for sellers in that they are requested to fund this expense.

Balloon Mortgages

These types of loans can be any length. In some cases you pay principal and interest and in others only interest. In any case, the loan must be paid in full when it's due in one of two ways: amortized over 30 or 50 years, and you pay the first 5 or 10 years before paying it off or refinancing; or you only pay the interest until the loan is due.

Graduated Payment Mortgages (GPM)

Originally designed for first-time buyers a GPM mortage allowed for reduced payments in the early years of the loan. Recently these types of loans have been phased out in favor of 5/25s and 7/23s (which are simpler to package).

Shared-Appreciation Mortgages

In this type of loan arrangement the lender offers a below-market rate in exchange for a share of the profits when the home is sold. You get all the tax benefits, and the lender doesn't make money unless you do. On the other hand, if your home increases greatly in value, you could lose a lot of that profit to the lender. These types of mortgages are most common among first-time buyers working with non-profit groups that help low to moderate income families.

Biweekly Mortgage

As the name implies, payments are made twice per months for a total of 26 per years (rather than 12 times or monthly). This reduces the amount of interest being paid over the life of the loan.

 

 
Buying Your Home Heart and Mind Buyer Agency
Exclusive Services Agency Relationships Title Insurance
Home Buying Process Advice and Strategy
Affect of the Economy Determining A Price First Time Buyers Viewing Homes Second Homes Home Search Strategy Waterfront Real Estate
Common Forms
Selling Your Home Your Home's Value Home Marketing
Digital Photography High Definition Video Property Storyboard Virtual Staging Internet Marketing
Pricing Factors Advice and Strategy
Counteroffers Establishing a Price Listing Agreements Feng Shui Principles Considering Repairs Value of Improvement Choosing A Realtor Common Mistakes
Home Selling Process
Stats
Maine Maine History Maine Geography Maine Economy Maine Demographics Maine Education Maine Climate Maine Beaches
Maine Real Estate Blog
Search for Properties Hyper Local Search Preset Local Searches
Maine Communities Portland South Portland Scarborough Falmouth Cape Elizabeth Cumberland Yarmouth Old Orchard Beach Freeport Harpswell
Search For Homes Maine Map Search Detailed Property Search Search By Address Search By MLS Number
Lifestyle Map Search
Home Valuation
Waterfront Real Estate Coastal Maine
Maine Coastal Properties
Maine Lakes
Maine Lake Properties
Maine Rivers Casco Bay Islands
Peaks Island Chebeague Island Great Diamond Island Long Island Cliff Island Cushing Island
Waterfront - FAQ's
Relocation Services Relocation Package Area Digital E-Guide Maine Counties Quality of Life Education and Schools Art and Culture Property Tax Rates Common Relocation FAQs Moving Long Distance
Mortgage Center Mortgage Types Credit Scoring Fee & Closing Costs Mortgage FAQs Tax Credit
Retirement in Maine Retirement Planning Retirement Communities Changing Demographics
Real Estate Investing Vacation Homes 1031 Tax Exchanges Condos and Townhomes Remodeling: Cost vs Value
Video Library