Illinois home financing, home loans, loans, home refinancing

Loan Descriptions
Which loan is right for me?

PROGRAM	LOAN RANGE	Maximum LTV
		purchase	refinance	cash-out
30 Year Fixed	$40,000 to $359,650	100%	95%	80%

Program Strengths:	Long term rate security

Program Drawbacks:	Often the highest rate program. May be more rate security than the owner will ever need.

Recommendations:	A good program if the owner does not plan to move or refinance for more than 10 years. A good choice if rates are historically very low. Points make sense to purchase if borrower plans to be in the property for at least 4 ½ years.

30 Year Jumbo:	$359,650 to $1,000,000	90%	90%	75%

Program Strengths:	Long term rate Security

Program Drawbacks:	Rates are higher than even the 30 year fixed conforming. Very expensive mortgage compared to Jumbo ARM's.

Recommendations:	A good program for the security conscious and those with fears of rising rates, but not usually a good way to save money.

15 Year Fixed	$40,000 to $359,650	100%	90%	80%

Program Strengths:	Rate security for 15 years. Rates often ½% better than the 30 year. More of your payment goes to principal and less to interest. Build equity at twice the pace of a 30 year loan without making double the payment.

Program Drawbacks:	Borrower will qualify for smaller loan amount than for 30 year amortized programs.

Recommendations:	If building equity is your goal and you would rather save money on interest than buy a more expensive home, the 15 year is the program for you.

15 Year Jumbo	$359,650 to $1,000,000	90%	90%	75%

Program Strengths:	Rate security for 15 years. Rates often ½% better than the 30 year. More of your payment goes to principal and less to interest. Build equity at twice the pace of a 30 year loan without making double the payment.

Program Drawbacks:	Borrower will qualify for smaller loan amount than for 30 year amortized programs.

Recommendations:	If building equity is your goal and you would rather save money on interest than buy a more expensive home, the 15 year is the program for you.

1 Year Adjustable	$100,000 to $1,000,000	90%	90%	varies
30 year amortization Rate adjusts every year based on 1 year treasury +( 2.75% or 3.25%). Caps are 2% per year and 6% for the term of the loan.

Program Strengths:	Lowest rate for first year out of available programs.

Program Drawbacks:	Risky for long term considering rate can increase as much as 6

Recommendations:	Great program for those who are going to be in a home for three years or less, those who plan on making more money over the next few years and those looking to refinance within the next three years. Not a good program if you think rates are going to increase over the next few years.

3/1 Adjustable	$100,000 to $1,000,000	95%	90%	varies
30 year amortization Rate is fixed for three years then adjusts each year based on the 1 year treasury +2.75% or 3.00% Caps are 2% per year and 6% for the term of the loan.

Program Strengths:	Lowest qualifying rate of all loans allows borrower to "qualify" for the largest loan. A good combination of fixed rate security and low starting rate.

Program Drawbacks:	Three years fixed may not be enough to give one "peace of mind".

Recommendations:	Great program for Jumbo loans and those who plan on being in a home for 3 to 5 years. Good program for anyone who believes that rates will be lower at some point in the next five years.

5/1 Adjustable	$100,000 to $1,000,000	95%	90%	varies
30 Year Amortization Rate is fixed for five years then adjusts each year based on the 1 year treasury +2.75% or 3.00%. Caps are 2% per year and 6% for the term of the loan.

Program Strengths	The five year lock in period offers as much security as most borrowers use (The national average life span of a loan is 4.7 years) and at a noticeable savings over the 30 year fixed. The 5/1 usually has a lower par rate( a rate with 0 points) than the 5/25 Balloon and a better rate after the 5th year of the loan.

Program Drawbacks:	Five years fixed may not be enough to give one "peace of mind".

Recommendations:	Great program for borrowers (Jumbo especially) who want added security of a longer fixed rate term but still want to save money over a 30 year.

5/25 Balloon	$40,000 to $359,650	95%	80%	varies
30 Year Amortization Rate is fixed for five years then adjusts one time based on the 60 day FNMA bond rate plus .625%.

Program Strengths:	Low rate with 5 year fixed rate security. Great program for borrower planning on paying off loan or relocating in five years or less. Program can have extremely low rates with modest point buy-down.

Program Drawbacks:	Five years fixed may not be enough to give one "peace of mind".

Recommendations:	Great program for borrowers (Jumbo especially) who want added security of a longer fixed rate term but still want to save money over a 30 year.

7/1 Adjustable	$40,000 to $359,650	95%	90%	varies
30 Year Amortization Rate is fixed for seven years then adjusts each year based on the 1 Year Treasury+ 2.75%.

Program Strengths:	At times has a lower rate than the 30 Year fixed.

Program Drawbacks	The spread between the 30 year fixed and 7/1ARM is usually not that dramatic.

Recommendations:	If you plan on being in your loan for seven years or less, want a low rate, and are insistent on an ARM.

7/23 Balloon	$40,000 to $359,650	95%	90%	varies
30 Year Amortization Rate is fixed for seven years then adjusts one time based on the 60 day FNMA bond rate plus .625%.

Program Strengths:	Fixed rate security for seven years is usually more than most borrowers need, at a rate better than the 30 year fixed.

Program Drawbacks:	The adjustment after the seventh year usually yields a high rate.

Recommendations:	A good mix of security and low rate for those planning on being in a loan for seven years or less.

Richland Mortgage Company
3016 South Halsted
Chicago, IL 60618
DIRECT PHONE: 847-516-0320 FAX 847-516-0321

E-Mail