City Mortgage
City Mortgage Loan
By Sam Ferdi
City Mortgage
City Mortgage Options
Whether you’re moving or simply investing in city real estate, you’ll probably need a city mortgage. It’s important to know and understand your options in a city mortgage.
o Fixed Rate - A fixed rate mortgage is the classic home loan. A fixed rate is also a stable and attractive alternative when interest rates are low.
o Variable or Adjustable Rate - With a variable or adjustable rate mortgage (ARM), the interest rate can change with a specified index, like the New York prime rate.
o Renegotiable Rate Mortgage - A few brokers offer a renegotiable rate mortgage.
o Balloon Mortgage - A balloon mortgage offers you a shortened loan term with lower payments. Options vary, but the piggyback loan usually has a higher rate.
o Interest-Only - During the loan term, you make payments in the amount of the interest on the loan, which is lower than a fully amortized payment that includes principal. After the first 5 to 10 years, the principal is due. This option can work well for people with income that fluctuates seasonally throughout the year or those who plan to sell the property for significantly more than the purchase price.
To avoid this extra monthly cost, you can get a second loan to cover the down payment in conjunction with your mortgage. One of the most popular ways is referred to as an 80/20 loan, one loan for 80% of the home’s value, and the other a “piggyback loan” for the 20% down payment. Options vary, but the piggyback loan usually has a higher rate. It may also be an adjustable rate or interest-only loan, like the mortgages described above. Other combinations include an 80-15-5 (80% mortgage, 15% piggyback, 5% cash down payment), 80-10-10 and more. Typically, these monthly payments are still lower than they would be if you had to pay PMI.
Getting a loan with any company can be confusing with all the different types of loans and all the terms surrounding the loan process. The mortgage company of your choice will help you if you need to calculate your payments and get a quick estimate using their mortgage calculator.
Steps the mortgage company goes through to get you a city mortgage loan.
- Pre-Approval
- Find the house you want
- Make an offer
- Finish up paperwork
- Choose a loan program that works for you
- The company will tell you when your closing date is
- You walk away with keys to your new home
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