| Cynthia DaSilva |
| (602) 930-3141 |
MORTGAGE LOANS
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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.
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.
• 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.
How Mortgage Loans Work
Excluding property taxes and insurance, a traditional fixed-rate mortgage payment consist of
two parts: (1) interest on the loan and (2) payment towards the principal, or unpaid balance of the
loan.
Many people are surprised to learn, however, that the amount you pay towards interest and
principal varies dramatically over time. This is because mortgage loans work in such a way that
the early payments are primarily in interest, and the later payments are primarily towards the
principal.
In the beginning... You pay interest
To help calculate monthly payments for loans based on different interest rates, lenders long ago
developed what are known as "amortization tables." These tables also make it fairly easy to
calculate how much money of each payment is interest, and how much goes towards the
principal balance.
For example, let's calculate the principle and interest for the very first monthly payment of a 30-
year, $100,000 mortgage loan at 7.5 percent interest. According to the amortization tables, the
monthly payment on this loan is fixed at $699.21.
More Info
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.
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.
• 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.
How Mortgage Loans Work
Excluding property taxes and insurance, a traditional fixed-rate mortgage payment consist of
two parts: (1) interest on the loan and (2) payment towards the principal, or unpaid balance of the
loan.
Many people are surprised to learn, however, that the amount you pay towards interest and
principal varies dramatically over time. This is because mortgage loans work in such a way that
the early payments are primarily in interest, and the later payments are primarily towards the
principal.
In the beginning... You pay interest
To help calculate monthly payments for loans based on different interest rates, lenders long ago
developed what are known as "amortization tables." These tables also make it fairly easy to
calculate how much money of each payment is interest, and how much goes towards the
principal balance.
For example, let's calculate the principle and interest for the very first monthly payment of a 30-
year, $100,000 mortgage loan at 7.5 percent interest. According to the amortization tables, the
monthly payment on this loan is fixed at $699.21.
More Info
| Cynthia DaSilva 602-930-3141 |
| AXIOM RESIDENTIAL PROPERTIES |