Mortgage Programs

What Type of Mortgage?

Explore the various types of mortgage financing available to you.

Let’s begin by looking at something you always hear about when you talk mortgage basics... points.

Lenders make money on mortgage loans two ways:  by charging you interest, which you pay each month when you send in your payment, and by charging you a ‘loan fee,’ commonly called points, that are paid when you take out the mortgage loan.

Some loans are ‘no point’ loans, which means that no money is collected up front. While this helps you with the cash that you need when buying the home, the trade off is that the amount of interest you pay each month will be higher.

Sounds simple enough, but what does it mean to you?  How do you choose between two different loans and decide which loan is cheaper for you?

One easy measure is to compare each loan’s annual percentage rate (APR).  Each lender is required by law to provide you with this information. The APR measures the impact of points and other loan expenses in addition to the stated interest rate, letting you compare different loan programs more effectively. When trying to decide between two loans, generally the one with the lower APR will be the cheapest.

The problem is that the APR is computed as if you held the mortgage until you completely paid it off.  What if you only intend to stay in this home or keep the mortgage for five or six years?  You’ll need to look at the effective annual interest rate.

In Whose Name Should You Own Your Property?

Single individuals will typically own the property in their name alone.

If you are buying the property with someone who is not your legal spouse, you have a choice among the forms of ownership available. Your ultimate decision should be made after consultation with your attorney.

The basic forms of ownership include the following:

• Sole tenancy,      
• Joint tenancy with right of survivorship,      
• Tenancy by the entirety,      
• Tenancy in common,        
• Community property, and life estates and remainder interests.