Types of Las Vegas Mortgage Loans

There are a lot of different types of loan programs, which means that just about anybody can get in on one.

Fixed-Rate Loans

A fixed-rate loan offers a set interest rate, and a monthly principal and interest payment throughout the entire life of the loan. You can choose a variety of terms, with 15 and 30 years being the most common. The fixed-rate mortgage loan is the most conservative, traditional choice and is still the most popular because it offers stability and predictable monthly payments.

Adjustable-Rate Loans (ARMs)

Adjustable-rate mortgages feature an initial interest rate (also called start rate) that is set for a period of time then adjusts with the current market rates after that set period is over. ARMs are appealing because they offer lower start rates than those of fixed rate home loans, giving you lower monthly payments and allowing you to qualify for larger loan amounts. The most common set terms for initial interest rates on ARMs are 1, 3, 5, 7, and 10 years.

Example: A 5yr ARM would have a initial interest rate set for 5 years. After the 5th year, the initial interest rate would adjust with the current market rate.

Federal Housing Administration (FHA) Loans

FHA mortgages help low-to-moderate-income homebuyers purchase homes with low down payments and flexible qualifying guidelines. These loans are insured by the Federal Housing Administration (FHA), which sets loan limits that vary by area. With an FHA mortgage, you can use a gift or unsecured loan for down payment and closing costs. Interest rates for FHA loans can be fixed or adjustable.

Department of Veterans' Affairs (VA) Loans

VA loans are available only to eligible veterans (or veteran’s spouse). This loan has a remarkable feature in that no out-of-pocket expenses may be required. VA loans do not require a down payment and have flexible qualification guidelines.

Jumbo/Non-Conforming Loans

If you are looking to borrow more than $415,000, you may consider a jumbo loan. A jumbo loan is also called a non-conforming loan because it does not conform to the loan limits set by The Federal National Mortgage Association (also called Fannie Mae) or by The Federal Home Loan Mortgage Corporation (also called Freddie Mac). These are the two government-sponsored enterprises that help facilitate the availability of home loans by investing throughout the country. Non-conforming loans typically have higher interest rates and different down payment requirements.

Home Equity Loans & Second Mortgages

Home equity lines of credit (HELOC) and second mortgages, provide a way for homeowners to finance just about anything, from kitchen remodeling to college tuitions by converting the equity in your home into cash. These loans are popular because the interest charges are tax-deductible, just as interest is deductible on first mortgages. Traditionally, HELOCs do not have a fixed rate, and the payment is based solely on the amount that has been used, not the maximum draw allowed. Payments can be either principal and interest or interest only.

Second mortgages are slightly different than a home equity line of credit in that the rate is fixed, with a principal and interest payment and you cannot draw from it as you would a HELOC. The equity would come to you in one lump sum in the form of cash instead of drawing from it a little at a time.

Common Misconception: Interest rates and loan programs for HELOCs and second mortgages are the same as those used for first mortgages. HELOCS and second mortgages are higher risk, therefore they will have higher rates and extremely limited loan programs.