Mortgages and Home Finance

The following is a quick overview of the types of Mortgage Programs that are available. Feel free to click on each type of program for additional information or contact one of our loan counselors directly at 1.866.963.2938

At “Blue Chip” we like to give our clients options when making a new mortgage. We find this “empowers” our clients which makes them feel more “in control” when deciding on the right loan. In our experience, all clients are different in what their “perceived value” is. By giving you (our clients) a selection of loans to choose from, you can make the right loan that suits you. Here are the four different loan options to consider:

1) Classic Mortgage : This loan is based on the “classic way” most mortgages were made in the past. It is still very much in vogue today. The origination fee and other applicable fees are financed/rolled into into the loan (when refinancing) or are paid at the closing when buying a home (purchase money mortgage). The main key here is the amount of origination fee charged for services rendered to originate the loan.

2) Low Cost Mortgage : This loan is very similar to the classic loan but the loan origination fee is either eliminated in its entirety or reduced significantly. This tremendously lowers the amount of total closing figures for the borrower in a mortgage refinance or a purchase money mortgage.

3) No Cost Mortgage : This loan is just like it sounds, no costs to make the loan and/or are reimbursed at closing for any costs paid out of pocket. The way this loan works is a credit is issued to the borrower at closing (for either a mortgage refinance or a home purchase mortgage) and the amount of the credit issued covers all of the standard closing costs the borrower is required to pay to make the loan. This is most commonly found in mortgage refinance loans but can also happen with purchase money mortgages. The trade off with this loan is the client receives a higher interest rate to offset the closing costs. (*In the event this is a purchase money mortgage the caveat is there are only select fees which can be covered for the client at settlement. This is dependent on the loan program and whether or not current underwriting guidelines will permit this. When you buy a home nowadays (circa 2011) there are only so many “credits” a buyer can receive based on Fannie Mae, Freddie Mac, and FHA guidelines. Further discussion with your loan advisor is warranted.)

4) Discount Point Loan : This loan is just like it sounds. Discount points are charged to “buy the interest rate down”. This is advisable depending on the clients circumstances. Many clients like to simply “see” what the rate and payment would be if they paid discount points to buy the rate down.

Popular Mortgage Programs

Fixed Rate : Monthly principal and interest payments do not change over the term of the loan, this means your mortgage expenses are easily anticipated. If you believe interest rates are going to increase and you will own your home for a very long time, this may be the best option for you. You can choose from 30, 25, 20 and 15 year programs to best suit your needs.

Click here to learn more about: Fixed Rate Mortgages

Home Equity Loans / Lines Of Credit : A home equity loan enables you to borrow money in a lump sum against the equity (the value of your home minus what you owe) you have built up in your home. This loan is subordinate to the existing first mortgage. Buyers commonly use a second mortgage to keep their first mortgage in the conforming range (which keeps the rate lower) and to avoid PMI. Home equity loans are often used to pay off credit card debt, pay tuition or to make major renovations to a home. If you want to get cash out this may be the best option for you.

Click here to learn more about: Home equity lines of credit

Adjustable Rate : The interest rate on this loan will be fixed for a stated period of time and will then become adjustable for the remainder of the loan. For example, a 5-year fixed (30-year) loan would have a fixed interest rate for the first five years and then convert to an adjustable rate for the remaining 25 years. You can choose from 7, 5, 3, 1 year and 6 month programs. If you believe you will own your home for less than 5 years, this may be the best option for you.

Click here to learn more about: Adjustable Rate Mortgages