Colorado Mortgage | Denver Mortgage Lenders | Adjustable Mortgage Rates

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Colorado Mortgage Loan Programs

We offer a wide range of Colorado Mortgage products, which are too numerous to list here. Some of the more common ones are discussed below. In general, we have a loan product for every need, whether you are purchasing or refinancing. We are committed to placing our clients in the loan program that is right for them.

Although we do offer high risk, low payment programs we tend to steer our clients away from these speculative products. Instead we recommend either low risk fixed rate products , or moderate risk adjustable rate products for the more savvy borrower. We want to earn our customers' future business, as well as receive their referrals. Therefore, we take care to place our clients into programs that are appropriate for them. If we "sell" you on a low payment high risk loan that forces you into foreclosure down the road, are you going to do business with us in the future or send us referrals? Not likely.

Most loan programs can be broken into 2 basic categories. Fixed rate and adjustable rate mortgages, also called ARMs. Although seemingly self explanatory, some confusion can arise, when other loan features are added, such as interest only. Many people assume that an interest only loan is an adjustable rate loan, however, interest only is a feature that can be applied to either a fixed rate or adjustable rate mortgage.

Fixed rate mortgages

Fixed rate mortgages are the most common and rightly so. They offer the borrower payment security, predictability and stability. You know what your Colorado Mortgage payment will be for the life of the loan. The interest rate and payment do not change over the life of these loans. They are also structured such that they will be paid in full when they reach full term.

For example, your standard 30 year fixed rate loan will be paid in full in 30 years, assuming you make each of the 360 payments on time. A 15 year loan is paid in full in 15 years, again, assuming you've made the required 180 payments on time. The same is true for 10, 20 and 25 year fixed rate loans. They are all paid in full at the end of their term. For the same $200,000 loan at the same interest rate, the payment will be higher the shorter the loan term is. The higher payment is required in order to pay the loan in full at the end of the loan term. So a 15 year loan will have a higher payment than a 30 year loan, but you will pay the loan off 15 years sooner. Also, shorter term loans tend to have lower interest rates than longer term loans.

Adjustable rate mortgages

Adjustable rate mortgages are just that - adjustable. Which means that the interest rate can change over the life of the loan. If the interest rate changes, your payment will also change. This inherently has more risk than a 30 year fixed rate loan for example, because you may not know how much your payment will change, and whether or not you can afford the new payment when it does change.

Even though adjustable rate mortgages in general are riskier, they have their benefits as well. In many cases, you can get an ARM that has a lower interest rate than a fixed rate mortgage, and therefore a lower payment. If you don't plan on staying in your home 30 years or even 15 years, or if you need better cash flow, choosing an adjustable rate mortgage can be of great benefit to you. However, when obtaining an adjustable rate mortgage, it's a good idea to have an exit strategy. You need to know when and how to get out of the loan if needed. Most people who get a Colorado Mortgage that is adjustable, plan on moving or refinancing their loan prior to the first adjustment period.

Adjustable rate mortgages adjust as dictated by the terms of the note. Your note will indicate exactly when your Colorado Mortgage will adjust and what is the maximum rate your loan can achieve at any given interval and over the life of the loan.

Generally speaking, if you secure a 5 Year Arm, you can expect the interest rate to remain the same for 5 years and then begin adjusting at month 61. A 3 Year Arm will be fixed for 3 years and then adjust. A 2 Year Arm for 2 years and then adjust, etc. After the initial adjustment period your ARM will continue to adjust over the life of the loan at regular intervals. The adjustment intervals usually occur every 6 months or 1 year depending on the terms of your loan as specified in your note.

Most Arms are also 30 year loans as well. Meaning that after 30 years the loan will be paid in full, assuming you've made all of the payments. Of course the payment could be significantly higher at the 30 year mark, compared to when it started. Borrowers who secure an ARM usually don't stay in them longer than the fixed rate period.

Interest Only

Interest Only is a feature that causes much confusion for Colorado Mortgage shoppers. As mentioned above, interest only is a feature that can be added to either a fixed rate mortgage or an adjustable rate mortgage. It also comes at a premium. Meaning that you can expect a higher interest rate if you choose the interest only feature compared to a fully amortized loan (principal and interest). However, even though the interest rate might be higher, the payment is usually significantly lower.

If you obtain a Colorado Mortgage that is a fixed rate loan and you desire the interest only feature, you will most commonly find it available on the 30 year fixed mortgage. Lenders generally don't offer the interest only feature on the shorter 10 year or 15 year fixed mortgages. It is uncommon for the interest only feature to be found on the 40 year loan as well, however we do offer one.

Interest only on a 30 year fixed loan

Most 30 year fixed rate mortgages that have the interest only feature, are interest only for the first 10 years (some are only interest only for 5 years, and we don't recommend these products). After the 10 year interest only period has expired, you will then be required to pay principal. This means your payment will go up. However, unlike an ARM, you can predict exactly what your new payment will be at the 10 year anniversary, because the interest rate will still remain the same. Whereas, with an ARM, you don't know what the rate will be in the future. So with a fixed rate mortgage you will have the same low payment for 10 years, then a moderately higher payment for the remaining 20 years of your loan. We can calculate this payment change for you and tell you exactly what it will be.

With an ARM, the interest only period is usually the same as the fixed rate period. For example, most 5 year adjustable rate mortgages that have the interest only feature, will be interest only for 5 years. Most 3 year ARMs with interest only will be interest only for 3 years, etc. There are some exceptions to this, but in general that is what you can expect. Therefore, at the end of the fixed rate term of your ARM, you can expect not only a rate increase, but a bigger payment increase due to the fact that you will now be required to pay principal as well. For this reason, most Colorado Mortgage borrowers who secure an interest only adjustable rate mortgage, intend on refinancing or selling at the end of the fixed rate period.

Jumbo vs. Conforming

All the information above applies to both Jumbo and conforming loan amounts. Currently, jumbo mortgages are any loan amounts above $417,000 for single family residences. Whether your Colorado Mortgage needs entail a conforming loan amount or jumbo, fixed, adjustable, fully amortized, interest only or a combination of the above, we have the product to fit your needs.

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