When acquiring a mortgage, there are various products, each with its characteristics, interest rates, and terms, to meet your needs.
Mortgage loan types
FHA (Federal Housing Administration) loans, like, Veterans and Rural Housing loans, are exclusively for transactions secured by your primary residence.
Fundamentally, these loans are used for purchasing your primary home, but they are also used for refinancing your primary residence. The advantages of these loans allow you to obtain a larger amount of financing relative to the value of your property. On the other hand, conventional loans allow transactions not only with your primary residence but also allow you to purchase or refinance second homes or investment properties.
For each type of loan, there are alternatives for selecting the loan’s interest rate and repayment term. Lower mortgage rates and longer terms will produce lower monthly payments. In choosing a lower interest rate, we recognize that it may result in a higher mortgage cost or discount. On the other hand, selecting a lower interest rate along with a shorter repayment term reduces the life of the mortgage and saves on interest payments.
There are several factors to consider when choosing the type of loan, the rate, and the term. You can ask yourself several questions to identify them:
- What is your creditworthiness?
- What amount do you have available to contribute to the transaction?
- What is your financial need or desire?
- What is your budget and ability to pay? – both for the monthly mortgage payment and others fixed expenses-.
- Do you want to shorten the term of your mortgage, reduce your monthly payment, or other?
Each case needs to be analyzed individually. The idea is to create a balance between interest and closing costs. In some cases, you may be better off with a slightly higher interest rate, but you can reduce your contribution at the time of the mortgage closing.
Components of mortgage payment
Monthly mortgage repayment terms can vary from 15, 20, 25, and even 30 years. The two main components of your monthly mortgage payment are the principal payment portion of the loan and the accrued or past-due interest for that specific monthly term. The principal amount and the overdue interest are calculated and paid in advance.
The monthly principal and interest payment is defined from the beginning of your transaction and is disclosed in the monthly amortization table provided to you at closing. However, throughout the life of the mortgage, your insurance premiums may change, as well as the amount of your property taxes.
Additional components to your monthly payment may correspond to your property insurance payment, such as hazard, dwelling, or condominium insurance, and the portion that accrues for paying property taxes, if applicable. In terms of portions for insurance and tax contributions, these are calculated based on your last insurance bill divided by twelve months, and the tax contributions are calculated based on the amount determined by the Municipal Revenues Collection Center (CRIM, in Spanish)which are paid in two semesters of the year, January and July. In addition, there may be other components to your mortgage payment if a flood policy covers your property, or if you have a mortgage insurance payment, MGIC, FHA Rural, or Housing or insurance policies are included to cover your mortgage payments.
Applying for a mortgage with Oriental is as easy as 1,2,3. First, you apply online here and one of our representatives will call you to review your application. Second, you upload the documents online. Third, you sign digitally without leaving your home.
