If you are a first time Fresno area home buyer or have purchased many homes, the type of mortgage you select is very important in Fresno California. Choosing a Home Loan Program that is right for you depends on many different factors. Thing to consider before deciding on the type of home mortgage loan is your current financial situation and how you expect your finances to change within the next few years. You must also look at how long you intend to keep your house and how comfortable you are with your mortgage payment changing over the years.

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Since property prices are so high in Fresno and thruout the State of California you should definately consider the many types of Fresno home mortgage loans available to the Fresno area real estate home buyer. To better finance your Fresno area home purchase there are a number of home mortgage loans available within California to select from before you complete your home Mortgage Loan Application.

There are now multiple home-loan offers and home mortgage loan decisions to make. In years past most everyone applied for a 25, 29 or 30-year fixed interest rate home mortgage loan, the most common being a 30 year mortgage loan. Now, there are so many different loan options targeted toward borrowers in the Fresno CA area, and in different financial situations by a number of Fresno California area Mortgage Loan Services (MLS) within the California MLS.

ARM (Adjustable Rate Mortgage Loans)

If you think you are only going to be living in your home for a few years an Adjustable Rate Mortgage is the best option. An adjustable rate mortgage is also referred to by the acronym "ARM". ARMS's have a set interest rate and steady monthly payment for a number of years. The mortgage loan payment is usually based on the amount to payoff the entire mortgage balance at the end of the term, which is usually 30 yrs.

The most common types of ARMS are 1 yr, 3/1 yr, 5/1 yr and 7/1 yr ARM, After the initial period is over, the rate and term of the mortgage will be adjusted annually to current market mortgage rate if you do not refinance the loan. Most ARMs have caps on how much the interest rate may increase after the loan expires. ARMS are very popular because the rates are usually about 2-3% lower that a fixed rate which means lower payments. The less number of years usually means the lower interest rate. A 1 yr ARM will have a lower interest rate than a 5/1 year term. ARM.

Fixed Rate Mortgage Loan

If you know that you are going to be in the house for a number of years then a fixed rate mortgage is best. A fixed rate mortgage is the most common home finance method and usually are 15 yr or 30 yr mortgage loan. A fixed rate mortgage loan is good if you know you will be living in your home for a long time and you don't have to worry about your payment ever increasing. Monthly loan payments will be the same for the entire life of the loan. The first payment will be the same as the last payment.

If home mortgage interest rates increase you have an advantage because your loan interest rate is locked-in at a lower rate which means your mortgage loan payment will not increase. But alternatively if interest rates drop your rate will not go down unless you refinance your mortgage. Rates went up to 18% at one time and as low as 4% recently so it is hard to tell what will happen in the future.

A 15 year home mortgage will have a somewhat lower interest rate but higher monthly payments than a 30 year fixed mortgage rate. The advantages to this type of mortgage financing is that you will get more home-equity by paying down the principal balance. You also will have the loan paid off faster and will not have paid as much total interest when the loan ends. It could save you $100,000 or more in interest.

A 30 or 25 year year home mortgage loan will usually have a higher interest rate than a 15 year and a lower payment. This is a good type of loan to get if you are short on money or cannot qualify for the higher mortgage payment. If you start to make more money and want to pay off the mortgage balance faster you can always set up bi-weekly payments with your lender. You also can just pay more money every month and apply it to the principle balance. Mortgage lenders rarely impose a penalty for this.

Interest-only mortgages

An interest only mortgage is where the borrower only pays the interest on the loan each month. This means property debt never declines. Many borrowers get this type of loan because the rates are real low and the payment is low. An interest-only mortgage may be good if you expect to earn a lot more in a few years and know you will be able to afford a higher mortgage payment later on where you can always refinance your loan. Some Fresno homeowners may choose interest only mortgages because they are going to invest funds and make money on the savings on the difference between an interest-only mortgage and a regular amortizing house mortgage loan with principle and interest.

Below is a checklist of items usually required for mortgage applications. These loan application items are not always required as there are limited doc, stated income, or even no documentation mortgage loans available to be approved for a Fresno California home mortgage loan.

Stated Income Mortgage Loans

A Stated Income Mortgage Loan is a good choice if it is difficult to verify income or are you are self employed. The income stated on the application must be reasonable in terms of your occupation and assets. Some lenders may require the borrower to meet certain credit score guidelines for the option of choosing a "stated income".Rates for stated income loans are usually only .500% above conventional rates. There are different guidelines these loans and listed below are some common lender requirements for this type of loan.

• Minimum middle credit score usually is 640-660 depending on lender
• 5 credit accounts are usually required.
• Bankruptcy and foreclosures must be discharged for 3 years with reestablished credit
• Two years employment with same employer or same type of work.
• Two months PITI reserves are required with an LTV = 80%. 6 months reserves are required otherwise.
• 5% minimum down payment is required from your own funds.

No Documentation Loans

Another type of mortgage loan is a no documentation loan. This type of loan is a option for those whose income or assets are difficult to verify. The applicant provides a minimum of information from the borrower including the name, address, Social Security number and contact information for an employer.

No documentation loans require no employment, assets or income be stated on the application. No information is verified beyond the credit check and information about the property. The difference in the rates is usually quite higher depending on the FICO credit score. Rates are usually 1 to 2% higher than conventional financing and are available on both fixed rate and adjustable mortgages.