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Understanding Loan Types

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Today's homebuyer has more financing options than have ever been available before. From traditional mortgages to adjustable-rate and hybrid loans, there are financing packages designed to meet the needs of virtually anyone.

While the different choices may seem overwhelming at first, the overall goal is really quite simple: you want to find a loan that fits both your current financial situation and your future plans. Though this article discusses some of the more common loan types, you should spend time talking with different lenders before deciding on the right loan for your situation.

General categories of loans
Most loans fall into three major categories: fixed-rate, adjustable-rate, and hybrid loans that combine features of both.

Fixed-rate mortgages
As the name implies, a fixed-rate mortgage carries the same interest rate for the life of the loan. Traditionally, fixed-rate mortgages have been the most popular choice among homeowners, because the fixed monthly payment is easy to plan and budget for, and can help protect against inflation. Fixed-rate mortgages are most common in 30-year and 15-year terms, but recently more lenders have begun offering 20-year and 40-year loans. Apply Now in less than 2 Minutes


Adjustable-rate mortgages (ARM)
Adjustable-rate mortgages differ from fixed-rate mortgages in that the interest rate and monthly payment can change over the life of the loan. This is because the interest rate for an ARM is tied to an index (such as Treasury Securities) that may rise or fall over time. In order to protect against dramatic increases in the rate, ARM loans usually have caps that limit the rate from rising above a certain amount between adjustments (i.e. no more than 2 percent a year), as well as a ceiling on how much the rate can go up during the life of the loan (i.e. no more than 6 percent). With these protections and low introductory rates, ARM loans have become the most widely accepted alternative to fixed-rate mortgages. Apply Now in less than 2 Minutes


Hybrid loans
Hybrid loans combine features of both fixed-rate and adjustable-rate mortgages. Typically, a hybrid loan may start with a fixed-rate for a certain length of time, and then later convert to an adjustable-rate mortgage. However, be sure to check with your lender and find out how much the rate may increase after the conversion, as some hybrid loans do not have interest rate caps for the first adjustment period.
Other hybrid loans may start with a fixed interest rate for several years, and then later change to another (usually higher) fixed interest rate for the remainder of the loan term. Lenders frequently charge a lower introductory interest rate for hybrid loans vs. a traditional fixed-rate mortgage, which makes hybrid loans attractive to homeowners who desire the stability of a fixed-rate, but only plan to stay in their properties for a short time. Apply Now in less than 2 Minutes

Jumbo Loan Programs
The term “jumbo loan” usually refers to a loan in an amount that exceeds the limits of conventional mortgage programs sponsored by Fannie Mae, Freddie Mac, or government agencies that purchase and/or insure mortgages. Because they are larger and more involved, jumbo loans are usually governed by stricter standards. It is not uncommon. for jumbo loans to have unique income and mortgage insurance requirements. All types of loans (fixed-rate, ARMs, and balloon) are available in jumbo loans. Apply Now in less than 2 Minutes

Balloon payments
A balloon payment refers to a loan that has a large, final payment due at the end of the loan. For example, there are currently fixed-rate loans which allow homeowners to make payments based on a 30-year loan, even thought the entire balance of the loan may be due (the balloon payment) after 7 years. As with some hybrid loans, balloon loans may be attractive to homeowners who do not plan to stay in their house more than a short period of time. Apply Now in less than 2 Minutes

Time as a factor in your loan choice
As has been discussed, the length of time you plan to own a property may have a strong influence on the type of loan you choose. For example, if you plan to stay in a home for 10 years or longer, a traditional fixed-rate mortgage may be your best bet. But if you plan on owning a home for a very short period (5 years or less), then the low introductory rate of an adjustable-rate mortgage may make the most financial sense. In general, ARMs have the lowest introductory interest rates, followed by hybrid loans, and then traditional fixed-rate mortgages. Apply Now in less than 2 Minutes

FHA and VA loans
U.S. government loan programs such as those of the Federal Housing Authority (FHA) and Department of Veterans Affairs (VA) are designed to promote home ownership for people who might not otherwise be able to qualify for a conventional loan. Both FHA and VA loans have lower qualifying ratios than conventional loans, and often require smaller or no down payments. Apply Now in less than 2 Minutes

Bear in mind, however, that FHA and VA loans are not issued by the government; rather, the loans are made by private lenders but insured by the U.S. government in case the borrower defaults. Remember too, that while any U.S. citizen may apply for a FHA loan, VA loans are only available to veterans or their spouses and certain government employees. Apply Now in less than 2 Minutes

Conventional loans
A conventional loan is simply a loan offered by a traditional private lender. They may be fixed-rate, adjustable, hybrid or other types. While conventional loans may be harder to qualify for than government-backed loans, they often require less paperwork and typically do not have a maximum allowable amount. Apply Now in less than 2 Minutes

 

 

 

 

 

Encinitas Real Estate : Situated along six miles of scenic coastline just 25 miles north of downtown San Diego, Encinitas is a charming community of some 60,000 full-time residents. Thanks to its fertile soil and mild climate, Encinitas has emerged as “The Flower Capital of the World.” The annual Encinitas Flower Show has been held continually since 1923 and one of the oldest and most popular on the West Coast. Encinitas' diverse cultures, beautiful beaches, Quail Botanical Gardens, Encinitas Ranch Golf Course and championship surfing make it a vacationers paradise. A drive along the world-famous Pacific Coast Highway reveals many charming Bed & Breakfasts, magnificent restaurants and beautiful campgrounds. A variety of housing types and prices are available to buyers ranging in price from under $200,000 to more than $1 million.

La Costa Real Estate is the ultimate resort community filled with numerous golf and tennis clubs. Located in San Diego County's rolling hills just two miles from the beautiful California coastline, La Costa features moderate year-round temperatures with cool San Diego breezes providing relief during the summer months. It is the perfect destination for those who enjoy the outdoors. Surfing, fishing, cycling, prestigious golf and tennis tournaments, shopping, water sports, the new Legoland amusement park are all available for residents and visitors alike. La Costa is just 30-minute drive from everything downtown San Diego has to offer from the world famous San Diego Zoo to the historic Gaslamp District. In addition, Orange County and all it has to offer is just 30 miles to the north. All of this truly makes La Costa one of the jewels of San Diego County. La Costa features a variety of neighborhoods and property types, from affordable single-family homes all the way up to multi-million-dollar luxury properties.

Carlsbad Real Estate is a unique coastal community located 35 miles north of the city of San Diego and is surrounded by mountains, lagoons and the Pacific Ocean. Although the "village" dates back more than 100 years, the city wasn’t incorporated until July 16, 1952. At that time, Carlsbad had a population of approximately 7,000 people and covered 7.5 square miles. Since its incorporation, the city has grown to more than 83,472 and 42 square miles. Carlsbad's great beaches, local attractions, world class resorts, shopping and restaurants set the standard for being a complete vacation destination and a great place to call home. The city offers a wide variety of home styles and prices. Older model single-family homes can be found for less than $300,000. Newer homes and estates start near $400,000 and run into the millions.

Cardiff-by-the-Sea Real Estate: Cardiff-by-the-Sea is a peaceful coastal village within the southern city limits of Encinitas in northern San Diego County. The community features local hospitality, fine dining, great surfing, pristine beaches and spectacular Pacific Ocean views and sunsets. Cardiff offers some of the finest dining on the West Coast, along with a variety of international cuisines from which to choose. Cardiff's Restaurant Row is located on Pacific Coast Highway, ensuring an ocean view with every meal. The community is a popular area for young families and features quality schools, safe neighborhoods and plenty of employment opportunities. Thanks to its location just 25 miles north of San Diego and 95 miles south of Los Angeles, residents have easy access to all of Southern California and Mexico on Interstate 5. The real estate market in this upscale community features some of the best ocean views in the county and offers a diverse range of styles and sizes in beach-close and inland homes. Condominiums begin in the low $300,000s and range up to $650,000. Single-family homes start in the mid-$400,000s and run up to $1.5 million for custom homes with panoramic ocean views.

Leucadia Real Estate : Leucadia is a quaint, seaside community located along Highway 101 in northern San Diego County. In Greek, Leucadia means "Sheltered Paradise," which still describes the unique area that is home to some 6,500 residents. The community - which was incorporated into the city of Encinitas in 1986 -- is home to an eclectic mix of surfers, artists and families who enjoy a laid back California lifestyle. Leucadia has retained its small-town charm while its residents have access to all the amenities of a metropolitan area. The community is located on the northern end of Encinitas, just south of Carlsbad. The city’s downtown shopping district, adjacent to coastal Highway 101, is more than 100 years old and features historic architecture, quaint shops, sidewalk cafes, and restaurants framed by beautiful flower baskets. The beaches in the area are outstanding and considered some of the best in the world for surfing with contests held throughout the year. The real estate market offers a mix of older homes, condominiums and townhouses, and custom homes and waterfront estates. Prices for condominiums range from $200,000 to more than $1 million. Single-family properties start at $300,000 and run up to $5 million and more for homes with spectacular ocean views.

Rancho Santa Fe Real Estate: Located in the rolling foothills of San Diego County, Rancho Santa Fe lies just seven miles east of the Pacific Ocean. The exclusive community features several country clubs, riding trails and is heavily wooded with eucalyptus trees that were planted in the 1920s by the Santa Fe Railway for future use as railroad ties. Rural Rancho Santa Fe is distinguished by its open spaces. Sidewalks and streetlights are banned from residential areas. Winding driveways lead to traditionally styled Spanish, Mediterranean or Ranch-style homes flanked by fragrants, citrus and native foilage. Elaborate landscaping protects the privacy that is integral to the Rancho Santa Fe way of life. The community encompasses some 8,560 acres with approximately 2,000 home sites that average about three acres each. The city was named as the best place to live in the United States recently by Luxury Media Corporation's Robb Report and the school system is consistently rated among the best in the state. In fact, the high school is one of the few to be named a California Distinguished School. The real estate market is exclusive with many spectacular properties. A limited number of condominiums and townhouses are available beginning at $350,000 and running up to $750,000. Single-family homes begin at $600,000 and range up to $10 million and more for magnificent hilltop estates and mansions with spectacular views and acreage. Land and lots are also available for custom homes.

Olivenhain Real Estate : If you’re looking for a charming, upscale community featuring magnificent homes and incredible ocean views, Olivenhain should be on your list. The community - which was incorporated into the city of Encinitas in 1986 - is nestled in San Diego County’s coastal foothills between La Costa and Rancho Santa Fe, just minutes from the area’s spectacular beaches. Olivenhain is of German origin, meaning "olive grove," and refers to the area’s rich agricultural history. Active flower and nursery growers continue the agricultural tradition in the area, but they are slowly being replaced by residential properties. Residents of the family oriented community enjoy a rural lifestyle with access to all of the amenities that Southern California has to offer. Olivenhain students attend the Rancho Santa Fe School District, one of the top rated districts in the state. The real estate market is made up almost exclusively of single-family homes. Properties range in price from $500,000 to $5 million and more for large estate homes with hilltop views. Many homes have equestrian facilities. Land is also available for custom homes.

Solana Beach Real Estate: Solana Beach, located on the northern coast of San Diego County, takes great pride in its two miles of pristine coastline, majestic bluffs, secluded coves, white sandy beaches, clear waters and challenging surf. Incorporated as a city in 1986, Solana Beach is home to approximately 14,000 residents. This charming seaside community features a unique blend of businesses including light industrial; commercial and professional services, neighborhood shopping centers with retail chain stores, boutiques, coffeehouses and restaurants. For those who enjoy antiques or design items, South Cedros Avenue is a true end-destination design district. There are the studios of award winning designers, art galleries, furniture emporiums and stores selling antiques, custom clothing, handcrafted items and jewelry. Solana Beach is an entrepreneurs dream. Many residents are engaged in proprietorships, management, professions or sales occupations. The lay of the real estate land starts at the ocean front bluff which ranges from stunning single-family estates to quaint beach cottages, some investment properties and large security gated condominium complexes with direct beach access. (This is the only place in San Diego that you will find the large complexes on the bluffs). Working east from the bluff you will first find the older neighborhoods with good-sized lots (average 1/3 acre), many with dynamic ocean views. The most eastern areas are newer and are adjacent to Del Mar and Rancho Santa Fe, some of which feature estate-sized lots. Prices for condominiums currently range from the high $200,000s to over $1 million. Single-family homes start in the $500,000s. With very little land left for development, Solana Beach represents an excellent place to live and invest your real estate funds.

Del Mar Real Estate, Spanish for "by the sea", began to grow when its two founders began selling 50x140 foot lots in the midst of a land boom in the late 1880's. When the South Coast Land Company bought the vacant land and built a resort with the Stratford Inn being the centerpiece, Del Mar began to flourish and finally received electricity from San Diego Gas and Electric in the late 1920s. It was at this time that Del Mar started developing its residential areas. It wasn't until 1958 that Del Mar residents began to debate whether the area should stay as an area of the county of San Diego, become part of the City of San Diego, or attempt independence through incorporation. In 1959, residents chose incorporation and established a five-member City Council.
Today, the City of Del Mar is two square miles of coastal land with a population of about 5000. The main attraction of visitors is still the beach and sunny weather. Of course, the annual Del Mar Fair and the well-known Del Mar Racetrack bring in people from the surrounding area and beyond.

 

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