Which Mortgage Option Is For You?
Whether you are ready to purchase, or refinance, the Loan Advisors at American Pacific Mortgage will help you choose the most competitive mortgage that match your financial circumstances.
Discover the difference between Fixed or Adjustable, Jumbo or Conforming and other loan types below.
We provide the options – you get the loan!
Fixed Rate Mortgage
Find Financial Stability with a Fixed Rate Mortgage
A fixed rate mortgage is the most popular loan program chosen by homeowners. If you are one of the many homeowners who desires a stable monthly interest rate and payment over the life of your loan, then a fixed rate could be the loan for you.
With a fixed rate loan, it doesn’t matter what is happening in the market. If interest rates begin fluctuating wildly, your rates will remain steady and sure. Nobody knows what the future holds, but with a fixed rate mortgage you can have the peace of mind that nothing will cause your rates and payments to rise.
Your financial planning is made easier when you know what your mortgage payments will look like for the next 15 or 30 years. Set and reach short-term and long-term financial goals by knowing your interest rates will never go up, and neither will your payments. With a fixed rate mortgage, your principal and interest payment is set in stone. While your property taxes and homeowner’s insurance may change throughout the years, your principal and interest payments will be reliable and consistent.
Choose a fixed rate term that works for your financial goals. You have the freedom to select a 15-year or 30-year fixed rate loan. In addition, you can pay your loan off faster whenever you would like. If you choose, you can make higher monthly payments and reduce the amount of time it will take to pay down your principal or pay off your mortgage before the end of your fixed term.
30 Year Fixed
- The most popular mortgage loan program
- A stable interest rate and reliable monthly payments over the life of your loan
- Build equity over time and pay principal balance down faster whenever you choose
A 30-year fixed is a great option when you want peace of mind of stable monthly payments to reach your long-term financial goals.
15 Year Fixed
- Interest rates are typically lower than 30-year fixed
- A fixed rate loan that allows you to pay principal down faster than 30-year fixed
- Pay higher monthly payments in order to pay less in total interest over life of loan
A 15-year fixed is a terrific option when you prefer a higher monthly payment in exchange for paying less in interest, want to pay your house off sooner, or when you have short-term plans for your home.
Adjustable Rate Mortgage
A dynamic loan option to power your goals.
An Adjustable Rate Mortgage, or ARM, can be a powerful tool for homeowners. An ARM is a mortgage that offers a low introductory fixed rate term, typically for 5, 7, or 10 years. After this period is over, the adjustable period follows for the remainder of the 30 year term. During this adjustment period the interest rates can adjust up or down, depending on the financial index it is attached to.
During the initial fixed period, the interest rates on an ARM are generally lower than with a 30 year fixed. This means lower monthly payments for those first 5, 7, or 10 years. If you plan on selling or refinancing your home in 5-7 years, the ARM is a great option for lowering your rate and payments during that introductory fixed period.
- Lower interest rates and payments early in the life of the loan
- Mortgage payments and interest rates remain fixed for introductory period
- Caps on interest limit the amount a rate can rise annually and over the life of the loan
Big Benefits For Short Term Goals
Lenders are able to offer lower interest rates on an ARM because they only have to guarantee that rate for the introductory fixed period. Luckily, the average American refinances or moves every 5-7 years, which just happens to be the same fixed period on an ARM.
For that period of time, you can benefit from lower interest rates and monthly payments compared to a 30-year fixed.
- Save money each month with lower mortgage rates/ payment
- Possibly qualify for a higher loan amount and afford more home
- Pay off your principal balance faster by making additional payments each month
What happens if you don’t refinance or move in the next 5- 7 years, and you reach the end of your ARM fixed term? When an ARM adjusts, the interest rates may be higher or lower than they are when you first get the loan. There is a risk of your interest rate and payments adjusting up. If your ARM does adjust up, a Cap will limit the amount that the loan can go up annually and over its lifetime. You will be able to anticipate a worst-case scenario and know exactly how far up your interest rate can change that year and beyond. Keep in mind that, while the initial fixed period of an ARM benefits the borrower, the adjustable period benefits the lender.
The bottom line is that an ARM can be a powerful tool to get you the lowest possible interest rates and monthly payments for a set period of time. This option is not right for everyone, but if you plan on moving or refinancing in the next 5 to 7 years, an ARM could be an ideal loan for you.
At The Scott Hill Team, we can help you to determine if an ARM is the best fit for your financial goals.
Big dreams mean big loans, and a Jumbo can get you there.
When the home of your dreams is in an extremely desirable higher priced real estate market, or your growing family demands a larger home, a Jumbo loan may be right for you.
Jumbo loans are also considered non-conforming loans because they exceed the conforming loan limit of $417,000. Some counties may vary in conforming loan limits, so our team will help you decide if your loan amount fits into the limits, or if a Jumbo loan is the right option for you.
Interest rates on Jumbo loans tend to be higher, due to the increased risk associated with larger loan amounts, and because the loans cannot be sold to Freddie Mac or Fannie Mae on the secondary market. Some borrowers may choose to pay a larger down payment to get their loan size below the conforming limit. Other borrowers are comfortable paying a higher monthly payment instead of putting the additional money down. For these borrowers with higher monthly income but less available savings, a Jumbo loan is the perfect solution.
What You Need to Know
- Jumbo loans are available in a variety of fixed and adjustable rate terms
- Tend to have higher down payment and cash reserve requirements
- For loans above the conforming loan limit up to $3 million
The exclusive community, the premium county, or the upgraded house to fit your growing family are all hallmarks of a Jumbo loan.
Our Team can help you determine if your loan amount falls outside of the conforming limits. While piggyback second mortgages and larger down payments could bring your loan amount down to conforming limits, you may choose to utilize a Jumbo loan instead. We will help you understand your options so you can decide which loan will best fit your needs.
Pay Just The Interest For a Preset Period of Time
An interest only loan allows you to pay only the full monthly interest due on your loan for the fixed period of the loan, which can range from 5 to 10 years. During the fixed payment period, you’re required to make only the interest payments; the principal remains unchanged. When the fixed period expires, you begin paying on the principal, too, resulting in an increased mortgage payment.
One unique characteristic of an interest-only loan is that you may elect to make either the minimum monthly payment (the interest-only portion), or, at your discretion, additional payments to be applied to principal to reduce the principal balance. Doing so will reduce your minimum monthly payment in the following month, because the minimum payment will be recalculated based on the remaining loan principal.
This unique tool is very attractive to borrowers whose income ebbs and flows, as it maximizes cash flow between commissions or bonuses. When income periods are lower, only the interest payment is due. In those periods that your income surges, you can make additional payments towards your principal and lower your future IO payments.
How Low Can You Go?
- Borrowers with short-term home plans who would rather increase monthly cash flow than build equity
- Buyers with the intent to remodel or repair a home and then quickly sell it Investors who want to free up cash flow for other investments
- Borrowers confident that their monthly income will increase
- Buyers with inconsistent monthly income
Most lenders will allow you to pay down the principal amount of your loan during the IO period without penalty, but some lenders may have limits on the amount of principal you can pay down during this initial period. Our loan experts at American Pacific Mortgage can help you choose the IO loan program that will best align with your principal payment plans.
An Interest Only loan is a unique program that will offer spectacular benefits to the right borrower, but it may not be right for everyone. If paying your house off quickly is your top priority, the IO loan is not for you. Let us help you select the home loan that is perfect for your individual home goals.
A Loan Designed To Get You Into A Home
FHA loans are insured by the Federal Housing Administration, and with the government guarantee, lenders are more willing to lend with more lenient qualifying guidelines. FHA loans have been specifically designed to help borrowers get into homes.
First Time Buyers can often benefit from the more lax guidelines of a FHA loan, including a lower down payment. Typical down payments can range between 10% – 20%, but with a FHA loan the down payment can be as low as 3%. This lower down payment can even be provided to you from a family member as a gift fund.
With more lenient qualifying guidelines, FHA loans make homeownership more accessible to more people. Credit scores to 640, lower debt ratios, and seller contributions are all allowed with a FHA loan. A few ups and downs in your credit history may be ok with the FHA.
- Ideal for First Time Buyers
- Lower down payments and gift funds allowed
- More flexible qualifying guidelines
- Available for purchase or refinance, fixed or adjustable rate
First Time Buyers are not the only ones who can benefit from a government guaranteed loan. You can refinance with an FHA loan, even if you don’t currently have an FHA loan. FHA loans come with a few requirements. Because the program intends to help buyers get into a home, you must live in it as your primary residence. (Don’t worry investors, we have plenty of other loan programs that are perfect for you.) Flip properties are allowed, however, as long as it is owner occupied.
Some FHA programs will require you to have the home appraised by an FHA- approved appraiser, and for you to pay mortgage insurance premiums. Plan on paying Up Front Mortgage Insurance (UFMI) and a Monthly Mortgage Insurance Premium, unless you qualify for the FHA streamlined* finance program. Our Team can tell you what you qualify for and what to expect for your total payments, including mortgage insurance.
* Qualifying factors may apply
A Superior Program to Recognize Our Heroes
A VA loan is insured by the U.S. Department of Veterans Affairs and issued by VA approved lenders. This government guaranteed loan encourages these approved lenders to lend with more flexible and lenient qualifying guidelines.
VA loans offer unmatched benefits to our heroes; the veterans, active duty, and surviving spouses.
- 100% Financing available*
- No mortgage insurance requirement
- Financing up to 103.15%
- Funding fee may be financed
Qualifying for a VA loan
Veterans, actively serving military personnel, and surviving spouses of veterans qualify for a VA loan with suitable credit, adequate income, and a valid Certificate of Eligibility
First Time Buyers
Veterans purchasing their first homes can qualify for more home thanks to no requirement for mortgage insurance. The VA does not require a down payment, and homebuyers can even purchase a home that needs repairs or remodeling and include the costs of those repairs into the VA loan, up to 103.15%.
The VA offers a Streamlined Refinance to lower the interest rates of many veterans without having to re-qualify. The VA mortgage is an incredible program that honors our heroes. The amazing benefits to buyers or borrowers cannot be matched by any other loan program. Purchase a home with no money down, borrow 100% of the value of the home or more, qualify with lenient guidelines, and avoid mortgage insurance requirements with a VA loan.
Not sure if you qualify? Want to compare a VA loan to other programs to be sure you are getting the perfect loan? Our team can go over the VA guidelines so you can rest easy knowing that the VA loan is a superior program established in recognition of you.
* Qualifying factors may apply
When “Home” Is Outside the City Limits
USDA loans are government insured 100% purchase loans for rural property outside of major metropolitan areas. USDA loans are serviced by direct lenders that meet federal guidelines. USDA loans offer unique benefits, including no down payment requirements for buyers.
Not Just for Farmland
If you live outside of a major metropolitan area, then you may qualify for a USDA loan. As a matter of fact, millions of borrowers are eligible for USDA loan, the only program that offers 100% financing available* to buyers who haven’t served in the military. The county and zip code of the home you want to purchase may meet the guidelines as long as it is outside of a major metropolitan area.
No Down Payment Required
Conventional loan can require a 20% down payment, but USDA loans stand alone in offering 100% purchase financing with no down payment requirements. As long as you meet the USDA requirements, you can get 100% financing when you purchase your rural home.
The requirements for a USDA loan are very specific, so our specialized loan experts at American Pacific Mortgage can help determine if you qualify under the current guidelines. The location of the home, your income, credit history, and number of dependents will determine eligibility for this fantastic program.
* Qualifying factors may apply
When A History Of Home Ownership Pays Off
If you are 62 or older and own your home, you are uniquely qualified to benefit from a reverse mortgage. This loan program is designed to help qualifying borrowers get access to their equity, stay in their home, and rid themselves of a monthly mortgage payment.*
A reverse mortgage gives you access to the equity that you have built up in your home over the years through principal payments, your down payment, and appreciation. You can receive this equity TAX FREE to use however you want.
- Retirement funding
- Vacation or travel
- Home repairs
- Medical Bills
With a traditional mortgage, you pay a monthly payment to a lender. With a reverse mortgage, the payment is made to you. How would you like to receive your equity?
- One lump sum
- Monthly payments
- Line of credit
You can choose these, or any combination, when you receive your equity from a reverse mortgage.
With a reverse mortgage, you stop making monthly payments on your mortgage. The amount owed then becomes a lien on the property. Any equity that you choose to have paid to you is added to that lien amount, with any interest accrued.
At the end of the reverse mortgage period, when you no longer occupy the home, the amount owed is either the mortgage balance or the value of the home, whichever is lesser.
A reverse mortgage can be a powerful tool to give you access to the equity that you have built up in your home over the years. It is not right for everyone, and if your financial goals include paying your mortgage off faster, than a reverse mortgage is not for you. However, if you have built up equity over the years and you want to get cash from your home or stop paying monthly mortgage payments, than a reverse mortgage is an excellent program to consider.
Our Team can sit down and listen to what goals you want to accomplish and help you to determine if a reverse mortgage is the right tool to reach them. Our trusted experts will help you understand your options, and give you all of the information to see if a reverse mortgage is the perfect program for you.
*Borrowers will still be responsible for tax, insurance and maintenance of the property. Must be primary residence. All Borrowers must be 62 or older.
EXPLORE YOUR HOME LOAN OPTIONS
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American Pacific Mortgage 3190 S. Bascom Avenue Suite 100 San Jose, CA 95124
Phone: (408) 626-0394 | Fax: (408) 558-4421 | E-mail: Scott@ScottHillTeam.com