M.B. 803676.000
Copyright (C) 2004-2009 Hager Investments llc. dba Ohio State Lending
M.B. 803676.000
Ohio State Lending offers a complete line of sought-after loan programs. We pride ourselves on
finding the right one to meet your specific needs. Here are just a few of the loan programs available.
Talk to one of our loan professionals today for the best programs, rates and services.
Conventional Loan
A conventional loan is a mortgage loan, which is not insured or guaranteed by any agency of the
state or federal government. Many years ago, the only loans available for housing were conventional
loans with very short terms of 3-5 years with balloon payments and high down payment
requirements of as much as 50% down.
Fixed Rate Mortgages
The most common type of mortgage program where your monthly payments for interest and
principal never change. Property taxes and homeowners insurance may increase, but generally your
monthly payments will be very stable.
Fixed rate mortgages are available for 30 years, 20 years, 15 years and even 10 years. There are
also "biweekly" mortgages, which shorten the loan by calling for half the monthly payment every two
weeks. (Since there are 52 weeks in a year, you make 26 payments, or 13 "months" worth, every
year.)
Fixed rate fully amortizing loans have two distinct features. First, the interest rate remains fixed for the
life of the loan. Secondly, the payments remain level for the life of the loan and are structured to repay
the loan at the end of the loan term. The most common fixed rate loans are 15 year and 30 year
mortgages.
During the early amortization period, a large percentage of the monthly payment is used for paying
the interest. As the loan is paid down, more of the monthly payment is applied to principal. A typical
30 year fixed rate mortgage takes 22.5 years of level payments to pay half of the original loan amount.
Standard ARMS:
ARMs with different indexes are available for both purchases and refinances. Choosing an ARM with
an index that reacts quickly lets you take full advantage of falling interest rates. An index that lags
behind the market lets you take advantage of lower rates after market rates have started to adjust
upward.
The interest rate and monthly payment can change based on adjustments to the index rate.
2/1 year arm: The 2/1 ARM mortgage is a 2-year level payment program that guarantees the
payments for the first 2 years and then it becomes a 1-year ARM for the remaining 28 years. The
interest rate upon renewal is determined by an index out of the lender's control and may not be
increased by more than 5% in interest. The prime advantage to the borrower is that the lender can
offer a fixed rate level mortgage payment at interest rates .25% - .50% below 30 year fixed rate
mortgages. This is because the lender is only locking in the interest rate for 5 years, rather than 30
years under the traditional 30-year fixed rate mortgage. The one disadvantage is the borrower may
have to pay substantially higher interest rates and payments after the first 2 years, if interest rates go
up over the first 2 years.
5/1 ARM: The 5/1 ARM mortgage is a 5-year level payment program that guarantees the payments
for the first 5 years and then it becomes a 1-year ARM for the remaining 25 years. The interest rate
upon renewal is determined by an index out of the lender's control and may not be increased by
more than 5% in interest. The prime advantage to the borrower is that the lender can offer a fixed rate
level mortgage payment at interest rates .25% - .50% below 30 year fixed rate mortgages. This is
because the lender is only locking in the interest rate for 5 years, rather than 30 years under the
traditional 30-year fixed rate mortgage. The one disadvantage is the borrower may have to pay
substantially higher interest rates and payments after the first 5 years, if interest rates go up over the
first 5 years.
Interest Rate Buy Downs
The most common buy down is the 2-1 buy down. In the past, for a buyer to secure a 2-1 buy down
they would pay 3 points above current market points in order to pay a below market interest rate
during the first two years of the loan. At the end of the two years they would then pay the old market
rate for the remaining term.
As an example, if the current market rate for a conforming fixed rate loan is 8.5% at a cost of 1.5
points, the buy down gives the borrower a first year rate of 6.50%, a second year rate of 7.50% and a
third through 30th year rate of 8.50% and the cost would be 4.5 points. Buy downs were usually paid
for by a transferring company because of the high points associated with them.
In today's market, mortgage companies have designed variations of the old buy downs rather than
charge higher points to the buyer in the beginning they increase the note rate to cover their yields in
the later years.
As an example, if the current rate for a conforming fixed rate loan is 8.50% at a cost of 1.5 points, the
buy down would give the buyer a first year rate of 7.25%, a second year rate of 8.25% and a third
through 30th year rate of 9.25%, or a three quarter point higher note rate than the current market and
the cost would remain at 1.5 points.
Another common buy down is the 3-2-1 buy down which works much in the same ways as the 2-1
buy down, with the exception of the starting interest rate being 3% below the note rate. Another
variation is the flex fixed buy down program that increase at six month interval rather than annual
intervals.
As an example, for a flex fixed jumbo buy down at a cost of 1.5 points, the first six months rate would
be 7.50%, the second six months the rate would be 8.00%, the next six months rate would be 8.50%,
the next six months rate would be 9.00%, the next six months the rate would be 9.50% and at the
37th month the rate would reach the note rate of 9.875% and would remain there for the remainder
of the term. A comparable jumbo 30 year fixed at 1.5 points would be 8.875%.
Interest Only Mortgage Loan Programs
With an interest only loan you only pay interest during the initial interest only period. This allows you
to:
Lower Your Monthly Payment
Qualify for a Larger Loan Amount
Free cash up for investing, paying down debt, etc.
Balloon Mortgages
Balloon loans are short term mortgages that have some features of a fixed rate mortgage. The loans
provide a level payment feature during the term of the loan, but as opposed to the 30 year fixed rate
mortgage, balloon loans do not fully amortize over the original term. Balloon loans can have many
types of maturities, but most balloons that are first mortgages have a term of 5 to 7 years.
At the end of the loan term there is still a remaining principal loan balance and the mortgage
company generally requires that the loan be paid in full, which can be accomplished by refinancing.
Many companies have other options such as a conversion feature at the end of the term. For
example, the loan may convert to a 30 year fixed loan at the thirty year market rate plus 3/8 of a
percentage point. Your conversion can be guaranteed based on certain criteria such as having
made your last 24 payments on time. The balloon mortgage program with the conversion option is
often called a 7/23 Convertible or 5/25 Convertible.
Construction/Commercial Loans:
Contact one of our Loan officers for more information on Construction and Commercial Financing.
We have many Mortgage Programs available just for you.
contact us today to find out which program would be best for you.
finding the right one to meet your specific needs. Here are just a few of the loan programs available.
Talk to one of our loan professionals today for the best programs, rates and services.
Conventional Loan
A conventional loan is a mortgage loan, which is not insured or guaranteed by any agency of the
state or federal government. Many years ago, the only loans available for housing were conventional
loans with very short terms of 3-5 years with balloon payments and high down payment
requirements of as much as 50% down.
Fixed Rate Mortgages
The most common type of mortgage program where your monthly payments for interest and
principal never change. Property taxes and homeowners insurance may increase, but generally your
monthly payments will be very stable.
Fixed rate mortgages are available for 30 years, 20 years, 15 years and even 10 years. There are
also "biweekly" mortgages, which shorten the loan by calling for half the monthly payment every two
weeks. (Since there are 52 weeks in a year, you make 26 payments, or 13 "months" worth, every
year.)
Fixed rate fully amortizing loans have two distinct features. First, the interest rate remains fixed for the
life of the loan. Secondly, the payments remain level for the life of the loan and are structured to repay
the loan at the end of the loan term. The most common fixed rate loans are 15 year and 30 year
mortgages.
During the early amortization period, a large percentage of the monthly payment is used for paying
the interest. As the loan is paid down, more of the monthly payment is applied to principal. A typical
30 year fixed rate mortgage takes 22.5 years of level payments to pay half of the original loan amount.
Standard ARMS:
ARMs with different indexes are available for both purchases and refinances. Choosing an ARM with
an index that reacts quickly lets you take full advantage of falling interest rates. An index that lags
behind the market lets you take advantage of lower rates after market rates have started to adjust
upward.
The interest rate and monthly payment can change based on adjustments to the index rate.
2/1 year arm: The 2/1 ARM mortgage is a 2-year level payment program that guarantees the
payments for the first 2 years and then it becomes a 1-year ARM for the remaining 28 years. The
interest rate upon renewal is determined by an index out of the lender's control and may not be
increased by more than 5% in interest. The prime advantage to the borrower is that the lender can
offer a fixed rate level mortgage payment at interest rates .25% - .50% below 30 year fixed rate
mortgages. This is because the lender is only locking in the interest rate for 5 years, rather than 30
years under the traditional 30-year fixed rate mortgage. The one disadvantage is the borrower may
have to pay substantially higher interest rates and payments after the first 2 years, if interest rates go
up over the first 2 years.
5/1 ARM: The 5/1 ARM mortgage is a 5-year level payment program that guarantees the payments
for the first 5 years and then it becomes a 1-year ARM for the remaining 25 years. The interest rate
upon renewal is determined by an index out of the lender's control and may not be increased by
more than 5% in interest. The prime advantage to the borrower is that the lender can offer a fixed rate
level mortgage payment at interest rates .25% - .50% below 30 year fixed rate mortgages. This is
because the lender is only locking in the interest rate for 5 years, rather than 30 years under the
traditional 30-year fixed rate mortgage. The one disadvantage is the borrower may have to pay
substantially higher interest rates and payments after the first 5 years, if interest rates go up over the
first 5 years.
Interest Rate Buy Downs
The most common buy down is the 2-1 buy down. In the past, for a buyer to secure a 2-1 buy down
they would pay 3 points above current market points in order to pay a below market interest rate
during the first two years of the loan. At the end of the two years they would then pay the old market
rate for the remaining term.
As an example, if the current market rate for a conforming fixed rate loan is 8.5% at a cost of 1.5
points, the buy down gives the borrower a first year rate of 6.50%, a second year rate of 7.50% and a
third through 30th year rate of 8.50% and the cost would be 4.5 points. Buy downs were usually paid
for by a transferring company because of the high points associated with them.
In today's market, mortgage companies have designed variations of the old buy downs rather than
charge higher points to the buyer in the beginning they increase the note rate to cover their yields in
the later years.
As an example, if the current rate for a conforming fixed rate loan is 8.50% at a cost of 1.5 points, the
buy down would give the buyer a first year rate of 7.25%, a second year rate of 8.25% and a third
through 30th year rate of 9.25%, or a three quarter point higher note rate than the current market and
the cost would remain at 1.5 points.
Another common buy down is the 3-2-1 buy down which works much in the same ways as the 2-1
buy down, with the exception of the starting interest rate being 3% below the note rate. Another
variation is the flex fixed buy down program that increase at six month interval rather than annual
intervals.
As an example, for a flex fixed jumbo buy down at a cost of 1.5 points, the first six months rate would
be 7.50%, the second six months the rate would be 8.00%, the next six months rate would be 8.50%,
the next six months rate would be 9.00%, the next six months the rate would be 9.50% and at the
37th month the rate would reach the note rate of 9.875% and would remain there for the remainder
of the term. A comparable jumbo 30 year fixed at 1.5 points would be 8.875%.
Interest Only Mortgage Loan Programs
With an interest only loan you only pay interest during the initial interest only period. This allows you
to:
Lower Your Monthly Payment
Qualify for a Larger Loan Amount
Free cash up for investing, paying down debt, etc.
Balloon Mortgages
Balloon loans are short term mortgages that have some features of a fixed rate mortgage. The loans
provide a level payment feature during the term of the loan, but as opposed to the 30 year fixed rate
mortgage, balloon loans do not fully amortize over the original term. Balloon loans can have many
types of maturities, but most balloons that are first mortgages have a term of 5 to 7 years.
At the end of the loan term there is still a remaining principal loan balance and the mortgage
company generally requires that the loan be paid in full, which can be accomplished by refinancing.
Many companies have other options such as a conversion feature at the end of the term. For
example, the loan may convert to a 30 year fixed loan at the thirty year market rate plus 3/8 of a
percentage point. Your conversion can be guaranteed based on certain criteria such as having
made your last 24 payments on time. The balloon mortgage program with the conversion option is
often called a 7/23 Convertible or 5/25 Convertible.
Construction/Commercial Loans:
Contact one of our Loan officers for more information on Construction and Commercial Financing.
We have many Mortgage Programs available just for you.
contact us today to find out which program would be best for you.
Our Loan Programs
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