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Mortgage 101
Deciding on the Right Mortgage Loan

Mortgage types
    Fixed-rate mortgage: Fixed-rate mortgages come with an interest rate that remains constant over the life of the loan. The interest rate is usually initially higher than for other types of mortgages. However, because the interest rate and monthly payment are fixed, they provide a stability that is appealing to many buyers.

    Adjustable-rate mortgage (ARM): ARMs have a period of fixed interest, after which the interest rate and payment adjust at specific intervals. In general, the interest rate and monthly payment for an ARM start off lower than for a fixed-rate mortgage of the same amount. However, they often become higher once a few adjustments occur. An ARM may be a good option for people who plan to sell in a few years or expect their income to increase significantly, but it can be risky. If you cannot afford the payment increase, you may lose your home.
Mortgage terms
The term refers to the length of the loan. The traditional mortgage term is 30 years, but it can range from 10 to 40 years. In general, the shorter the term, the lower the interest rate. You get a lower payment with a longer term, but you wind up paying more in interest over the life of the loan (not just because of the higher interest rate but also because you are borrowing for a longer period of time).

Government programs
Loans offered through federal government programs can come with more attractive features than conventional loans. The two most popular ones are:
    VA loans: VA loans are insured by the Department of Veterans Affairs and are only available to eligible veterans. No down payment is required.

    FHA loans: FHA loans are insured by the Federal Housing Administration, a division of HUD (the Department of Housing and Urban Development). A down payment of at least 3.5% is required.
Many states and cities have programs specifically for first-time homebuyers. They make it easier to buy a home by offering such things as down payment assistance, below-market-rate units, and/or low-interest loans. Contact a Real Estate Loan Consultant to learn about the many types of Mortgage Loans that NuVision has to offer.

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