A home loan is a significan investment for most people, and it is not a decision to be taken lightly. The property and loan you select needs to suit your longer term needs.

Consider:

	Does the loan suit your long-term needs?
	Will you be able to meet your commitments if you reduce your working hours or salary?
	Are you planning to start a family? If you are, what financial impact will this have?

There are a number of factors that must be considered when choosing a loan program. Your Loan Specialist will ask you to consider the following questions when making your decision:

If you plan to own your home longer than 5 years, conventional wisdom suggests that a Fixed Rate loan may be most appropriate for you. Although the interest rate on Fixed Rate loans tends to be higher than the initial interest rate on Adjustable Rate loans, Fixed Rate loans have a fixed interest rate and a consistent payment amount for the life of the loan, typically 15 or 30 years.

If you plan to own your home less than 5 years, conventional wisdom suggests that you may want to consider an Adjustable Rate Mortgage (ARM). The initial interest rate on an ARM is typically lower than a Fixed Rate loan, which will result in lower monthly payments for the initial set period of the loan. One of the disadvantages of an ARM is that after the initial period (typically 3, 5, or 7 years) the interest rate on the loan adjusts periodically in accordance with market conditions (typically limited by an interest rate cap). In a rising interest rate environment your monthly payment could significantly increase as a result of these adjustments.

If you are retired or nearing retirement and living on a fixed income, you may prefer a Fixed Rate loan. A Fixed Rate loan will provide you with peace of mind that your mortgage payments will remain the same, and you will not have any surprises when budgeting your monthly expenses.

If you expect your income to increase over the next few years you may want to consider an ARM loan. Your initial interest rate will be lower with lower monthly payments that may increase as the loan matures. The lifetime interest rate cap of the ARM loan prevents the interest rate from increasing past the set cap.

There are many loan programs available to accommodate smaller cash downpayments. Homebuyers who make downpayments of less than 20% of the purchase price of a home will most likely have to pay mortgage insurance, which is added to the monthly mortgage payment. As an alternative to paying mortgage insurance, many homebuyers qualify for an 80/10/10 loan program, which eliminates the need for mortgage insurance but requires the homebuyer to take a first mortgage equal to 80% of the home’s sales price, a second mortgage equal to 10% of the home’s sales price, and to make a cash downpayment of 10% of the home’s sales price.

Many cities and counties also have downpayment assistance programs for qualified buyers. You can contact your local city or county office to find out if these programs exist in your area and whether you are qualified to participate in any program.

If you are interested in paying off your mortgage quickly and saving money by paying less interest, a shorter-term mortgage (with a higher monthly payment as compared to a typical 30 year loan) may be your best option. There are a number of options available, including 15- and 20-year Fixed Rate mortgages.

We can assist your in reviewing your current and future financial needs.