MPR Finance offers several loan programs to best suit your needs.
1. Fixed Interest Loan Programs:
In a fixed rate mortgage loan, the interest rate and your mortgage monthly payments remain fixed for the period of the loan. The major advantage of fixed rate mortgages is that they present predictable housing costs for the life of the loan. This loan is recommended for individuals planning to stay in a home for more than five years. Fixed-rate mortgages are available most commonly for 30 or 15 year terms. Generally, the shorter the term of a loan, the lower the interest rate you could receive. With a traditional 30-year fixed rate mortgage, your monthly payments are lower than they would be on a shorter term loan. However, if you can afford higher monthly payments, a 15-year fixed-rate mortgage allows you to repay your loan twice as fast and save more than half the total interest costs of a 30-year loan.
If you feel more comfortable knowing that your monthly mortgage payment of principal and interest will be the same for as long as you have your loan, then the fixed interest loan program is a good type of loan for you. Fixed rate loans provide stability and peace of mind with fixed principal and interest payments for the life of the loan.
2. Adjustable Rate Loan Programs (ARM):
A variable or adjustable loan is a loan whose interest rate and monthly payments fluctuate over the period of the loan. ARM’s offer lower initial rates by sharing the future risk of higher rates between borrower and lender. With variable rate mortgages, periodic adjustments based on changes in a defined index are made to the interest rate. The index for your particular loan is established at the time of application
Each ARM has four basic components:
- Initial interest rate, typically one to three percentage points lower than that of most fixed rate mortgages. Lower interest rates also make ARM’s somewhat easier to qualify for. The initial interest rate is tied to certain economic indicators that dictate in part what the monthly payments will be.
- Adjustment interval, at the time between changes in the interest rate and/or monthly payment will be.
- Index against which lenders measure the difference between what they are making on their investment in the mortgage and what they could be making on other types of investments.
- Margin or the additional amount the lender adds to the index to establish the adjusted interest rate on an ARM.
Traditionally, ARMs have lower initial interest rates that are typically 2-3 percentage points below conventional fixed-rate loans. This lower interest rate and lower initial monthly payment may enable you to qualify for a larger home loan. The interest rate on these loans fluctuates periodically in response to changing market conditions. Therefore, your monthly mortgage payment will increase or decrease accordingly. If you expect your income to increase or plan to sell your home in a few years, a 30-year ARM plan may be right for you.
3. 100% Financing Programs
100% finance loans are mortgages that require no down payment form the borrower. Loans that are financed 100% are available as two types: 100% financing which requires Private Mortgage Insurance (PMI) or, 80/20 which consists of an 80% first and 20% second mortgage where the lender waives the PMI requirement.
80% of the first mortgage can be a fixed, adjustable or an interest-only loan. 20% of the second mortgage can be fixed, interest only or a home equity line of credit. Combined, the two loans allow you to purchase 100% of your home with no money down. 80/20 loans increase savings by avoiding PMI and increasing the amount of your mortgage tax deduction.
100% financing is ideal for individuals who either don't have a lot of ready cash for a down payment or are saving their funds for other uses. These types of loans are also ideal if the borrower is looking to finance as much as possible for tax deduction purposes.
4. Interest Only Programs
A mortgage is “interest only” if the monthly mortgage payment does not include any repayment of principal. For a set period, generally in the early years of the loan, you pay only the interest portion of your monthly payment. During that period, the loan balance remains unchanged. It is important to understand that during the early years of an interest only loan practically no money is used to pay down the principal. Interest only loans are most commonly available in 1, 2, 3, 4, or 5 year terms. At the end of the interest only period, your loan reverts back to its original terms, with the monthly payments adjusted upward to reflect full amortization over the remaining years of the loan.
If you are looking for a way to afford more home for less money, free up cash for home improvements, or planning to move in a short period of time, your mortgage solution may lie in an interest only loan.
