What’s the Best Mortgage for You?
Just as there many kinds of homes and properties, there are many kinds of mortgages. By understanding the different types, you’ll be better prepared to make a sound decision and choose the mortgage that’s the most appropriate for you.
Here’s a guide to some of the more common mortgages, and a few of the less common as well.
Fixed-rate loans feature predictable rates and payment schedules for certainty and peace of mind. They’re often ideal for long-term mortgages and home investments. With a fixed–rate mortgage, you'll always know what your monthly principal and interest payments will be. You can also lower your monthly payments by spreading them out over a long period of time. This is a good loan to lock in when rates are low. The predictability of the payments and payment schedule make it easier to pay ahead of your mortgage as well, such as making an extra mortgage payment every year to reduce the length of the loan. A variety of monthly repayment terms are available.
No closing cost mortgages can you save you a great deal on your next home. Whether your household is expanding or you just want to upgrade your nest, the savings on closing costs can easily add up to thousands of dollars. For first-time homeowners, that’s extra cash that can be used to make your new house really feel like home. You can also use the extra money to invest in a home improvement project that will help you sell your home for more down the road. Click here for details.
First Home Club loans are offered through the Federal Home Loan Bank of NY. For those who qualify, the program matches $4 for every $1 you save, up to $7,500, toward the down payment and closing costs (if applicable) on a new home. “First-time buyers” are defined as anyone who has not owned a home for three years. As a participating First Home Club lender, Community Bank, N.A. will help you open your savings account and will provide your mortgage as well. The number of first home club loans allotted to Community Bank, N.A. is limited. Please check for availability.
Mortgage refinancing can help you get more out of your home by restructuring your current mortgage terms. You can refinance for a variety of reasons, including:
- Cash-out equity
- Shorten/extend payment terms
- Borrow at a lower rate
- Eliminate mortgage insurance (Certain conditions apply. Speak with a mortgage loan officer for details.)
Jumbo mortgages are designed for higher-value properties and are offered in fixed rate options. The loan-to-value ratio should be 70%-90%, based on borrowed amount. Financing is available up to 85% of your home’s value, with no mortgage insurance for a purchase or no cash-out refinance and up to to 80% on a cash-out refinance.
Mortgages for second homes are available to those who are interested in that home away from home. You generally will need a larger down payment, as much as 20% of the purchase price. And the credit requirements are slightly higher. If you plan to use the property primarily as an investment, stricter qualification rules may apply.
Construction loans can help you afford to build a new home or undertake significant remodeling jobs. Ideal for fixer-uppers, construction loans are payable only to approved contractors.
Bi-weekly loans reduce interest costs by adjusting payments to a bi-weekly schedule.
Affordable housing programs include the no closing cost mortgage (discussed above) and United States Department of Agriculture (USDA)-sponsored loans. Loans through the USDA offer the following:
- Zero down payment for owner-occupied and single-family homes
- Property must be in eligible area
- Up to 100% loan-to-value ratio
- Seller can contribute up to 6% of the sales price to be used for closing costs and pre-paid interest and tax escrows
Vacant land loans are available for either “raw land” or a buildable lot. The loan-to-value ratio needs to be 65%-75%. Fixed-rate loans are also an option. Vacant land loans can be used only for purchasing land.
Doublewide and singlewide loans are secured for home financing assistance of single or double wide manufactured homes on owned land. These are homes that are prefabricated - meaning they are built offsite and then transported to the property site. The loan-to-value ratio should be 80% or less, and fixed-rate loans are also an option. A variety of monthly repayment terms are available.
Contact one of your local mortgage specialists here.