Mortgages

 

Mortgages                

   

Just as shopping for a home includes the evaluation of many different home styles and options, finding the right mortgage product is just as important. First Federal Bank lenders will provide you with professionalism and experience while offering you competitive interest rates and outstanding, local service. Our job begins with fully understanding your needs and both your short and long term goals. We will discuss various options with you to determine what type of financing is ideal for your situation. We then evaluate the market and all of our current products, rates and underwriting guidelines to find the very best loan product for your needs.

It wasn't long ago that a 30 year fixed rate mortgage was your primary option. Today, many popular loan programs exist. We have provided the descriptions of the basic loan programs available to help you understand the benefits and drawbacks of each of the various types of mortgages. And don't forget that First Federal Bank can provide you with a Free Pre-Qualification Analysis so you'll know the amount of loan you'll qualify for before you go house hunting.

The following factors should be considered when evaluating loan programs:

  1. How important monthly payment stability is to you.
  2. Your ability to qualify at market rates for the loan amount selected.
  3. How long you plan to stay in the home.
  4. Expectation of stable versus rising or declining income.
  5. Level of current market rates - high versus low.
  6. Possibility of significant rate changes.
  7. Existence of up-front costs.
  8. Your desire for rapid home equity build-up.  

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Fixed Rate Mortgage Loans                

   

A fixed-rate mortgage has a fixed interest rate, fixed, equal monthly payments, and is fully amortizing over the term of the loan.  A portion of each monthly payment covers the interest due on the loan. The remaining portion is applied toward the reduction of the principal balance. Regular payments systematically reduce the loan balance until the loan is paid in full.

The standard fixed-rate mortgage is still the most popular mortgage loan type and may be the best mortgage option for you if you:

  • Like a consistent payment amount to allow for easier budgeting
  • Do not like the risk of fluctuating interest rates
  • Like the idea of flexibility in the size of the monthly mortgage payment as well as how quickly the principal balance can be paid down. Shorter terms carry lower interest rates and higher monthly payments. Longer terms have smaller monthly payments and may be easier to budget.
  • Are interested in a bi-weekly payment option that can reduce the principal balance of your loan quicker.

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Adjustable Rate Mortgages      

 

Adjustable-rate mortgages (ARMs) have fluctuating interest rates that rise and fall with economic factors allowing the potential for changing payment amounts. ARMs often have substantially lower initial interest rates than the rate for fixed-rate loans.  An Adjustable Rate Mortgage may be ideal for you if you are:

  • Looking for lower payments at the beginning of your loan to help you borrow more
  • Planning to move within a few years
  • Confident your income will keep pace with the rate adjustments

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Construction Loans    

You have more to worry about when building your home than which construction loan is best for you. Our lenders will help you choose which of our three construction loans best meets your financial needs:

Newly Built Home Mortgages:

For new construction homes that will only have one payment to the builder at the closing of the loan.

Construction Conversion Mortgage:

For new construction homes with multiple payments to the builder during construction, and you make interest-only payments during the construction period.

Renovation Mortgage:

For major home improvements to your current home with multiple payments to the contractor during the renovation process and you make interest-only payments during this period.

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First Time Home Buyer Options    

 

Purchasing your first home can feel like an overwhelming process. The people you know and trust at First Federal Bank are committed to understanding your specific financial situation, explaining all of your mortgage options and making the process as hassle-free as possible. We have designed a special kit just for first time homebuyers to help guide you through the process.

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Low Down Payment/No Down Payment Options    

 

Special loans are available with little or no money down if you meet certain income and housing criteria. Programs are also available through agencies such as the USDA Office of Rural Development and the Federal Home Loan Bank. The following are several options available to you to make your dream of owning a home a reality:

100% Financing

100% Financing provides you with an option to own your own home sooner than traditionally possible while building your investments by eliminating your need for a down payment. If you already own a home, you can refinance up to 100% of your home's value. 100% Financing may be the best mortgage option for you if you:

  • Are looking for the maximum financing available
  • Have limited or no funds available for a down payment or would rather keep your funds in other investment options
  • Are looking for flexible options for additional home buying potential

97% Financing

97% Financing improves your purchasing power, regardless of income amount or geographic location, by allowing you to purchase or refinance your home with as little as 3% down or 3% equity, respectively. 97% Financing may be the best mortgage option for you if you:

  • Are looking for a loan that allows down payment funds to come from a combination of sources
  • Have limited funds available for a down payment or would rather keep your funds in other investment options
  • Want to avoid extra fees typically required with 100% financing

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Balloon Mortgages   

 

A balloon mortgage offers the fixed, equal monthly payment of a fixed-rate mortgage, but the loan does not fully amortize over the original term of the loan. In other words, instead of taking 30 years to pay down the mortgage, the outstanding principal balance is due at a specific time prior to the end of the 30-year period, typically after 5 or 7 years. This final payment is called the balloon payment because of its large size. A balloon mortgage may be the best mortgage option for you if you:

  • Like a consistent payment amount to allow for easier budgeting
  • Are seeking a more attractive interest rate than the typical 30-year fixed-rate mortgage
  • Are looking to enhance your purchasing power, particularly if you anticipate selling or refinancing the home before the end of the balloon period
  • Expect to relocate within 5 to 7 years

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Reverse Mortgages    

A reverse mortgage is a type of loan available to you if you are age 62 and better. It is used as a way of converting your home's equity into one or more cash payments while still retaining ownership and living in your home without monthly payments. In a typical mortgage, a home owner pays a monthly amount; after each payment, the owner has more equity in the house. After a certain amount of time (typically 30 years), the mortgage will be paid in full and the property released from the debt. But in a reverse mortgage, the loan pays you instead. As you receive monthly payments, the debt on the house increases each month. Repayment of the loan is deferred until you are no longer living in your home. A reverse mortgage may be ideal for you if you:

  • Would like to access the equity in your home without making a monthly payment
  • Want a cushion for major expenses, such as major home repairs, medical bills or long-term care
  • Have a regular need for additional income
  • Would like to purchase another home and use a reverse mortgage to help finance that purchase

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