Norcom’s licensed experts can help guide you to the right loan for your unique circumstances. To get you started, here are some basics about the different kinds of mortgages commonly available.
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When you get a Fixed-Rate Mortgage, it means that the interest rate is “fixed” for the full term of the loan. That means that the principal and interest rate of the loan will remain the same, as you repay your mortgage each month. If you want the security of knowing that your rate – and, therefore, your monthly payment – won’t change over the life of your mortgage, then a Fixed-Rate Mortgage is a good option to consider.
An Adjustable-Rate Mortgage, or “ARM,” typically has a lower interest rate in the first years of its term. Then, the interest rate can change – “adjust” – over time, based on an index, which is spelled out in the terms of the loan. A 5/1 ARM, for example, will have a low rate that remains the same for the first five years of the loan, then adjusts every year thereafter. Typically, an ARM will have low and a high limit on how much your mortgage payments can change over a given period of time, as well as over the term of the home loan.
An ARM is often attractive to a buyer who expects to stay in their home for only a few years. For example, if you purchase a 5/1 ARM – with a low, set rate for the first 5 years – and plan to move before the mortgage rate adjusts to a higher rate, you can save money on your interest costs. So whether an ARM is right for you all depends on your circumstances and goals.
The mortgage “term” is simply the amount of time the buyer has to repay the home loan. Typical terms include 30, 20, or 15 years. Norcom offers a complete range of terms, and our loan officers will work with you to determine which type of loan best suits your needs and budget.
“Conventional” mortgages are loans that are not insured or guaranteed by the federal government. They are the most popular type of loan used to purchase or refinance a single-family home. To qualify for a Conventional Mortgage, you typically need a minimum down payment of 5% of the home purchase price (typically requiring mortgage insurance). If you have a down payment of 20% or more, you will not need to pay the additional expense of mortgage insurance.
A Government Mortgage is a loan that is insured by a department of the U.S. government, such as the Federal Housing Administration (FHA), or the Department of Veterans Affairs (VA), which is known as a VA loan. Typically, a Government Mortgage offers the homebuyer a lower down payment requirement and/or a lower interest rate.
FHA Mortgages are designed to help low-to-moderate income homebuyers purchase a home. They offer the advantages of requiring a low down payment and offering more flexible guidelines for qualification. FHA loans are insured by the Federal Housing Authority. The FHA also sets limits on how much you can borrow, depending on the area. The mortgage experts at Norcom are well versed in all the details of FHA loans and can help you determine if you qualify, as well as how much you can borrow in your area.
If you are serving in the Armed Forces, or are a veteran, you might do well to explore a VA Mortgage, a home loan that is guaranteed by the Department of Veterans Affairs (VA). No down payment is required. To determine if you qualify for a VA Mortgage, just talk with one of Norcom’s mortgage experts.
The United States Department of Agriculture’s Section 502 Guaranteed Rural Housing Loan Program is designed to serve rural residents who have a steady, low or modest income, and yet are unable to obtain adequate housing through conventional financing. These loans enable low and moderate-income rural residents to acquire modestly priced housing for their own use as a residence through the purchase of a new or existing dwelling or the purchase of a new manufactured home. Section 502 loans can be used to build, repair, renovate or relocate a home, or to purchase and prepare sites, including providing water and sewage facilities. Eligibility: Applicants for loans may have an income of up to 115% of the median income for the area. Area income limits for this program are here. Families must be without adequate housing, but be able to afford the mortgage payments, including taxes and insurance. In addition, applicants must have reasonable credit histories.
The Connecticut Housing Finance Authority (CHFA) has developed a special program to help first-time homebuyers in Connecticut. CHFA loans offer lower interest rates, an easy application process and low down payments. The program is designed to extend the opportunity of homeownership to buyers who may not be able to obtain a mortgage through conventional lending programs. Norcom is one of Connecticut's leading CHFA lenders. We can guide you through the qualification and application process, as well as help you take advantage of a number of available options that can make your first home more affordable.
Fannie Mae and Freddie Mac set a dollar value, called the “conforming loan limit,” to define the loan sizes that they will guarantee. A Jumbo Mortgage exceeds this dollar value and, as the name implies, it is typically used to purchase a “luxury home” that exceeds the value of the average home in the area. Because the borrower is asking for a larger loan amount, the interest rate on a Jumbo Mortgage is usually higher.
Norcom Dream Home Loan™ FHA 203(k)
Sometimes, you need money to both purchase and improve a property. Norcom’s Dream Home Loan™ provides you with cash to pay for upgrades, improvements or other repairs to the property you wish to buy. These “rehabilitation” loans – available as FHA 203(k) loans – are offered through CHFA.
A Norcom Dream Home Loan can provide you with the resources to add a new bathroom, remodel the kitchen, buy appliances, make repairs to the roof, install new flooring, and more. If you are applying for a “rehabilitation” loan, the potential value of the repairs and/or alterations to the property will need to be taken into account before you get approval for the loan. We can help you consider all the options in detail and guide you through the home loan application process.
Homeowner’s Equity Recovery Opportunity Loan Program (HERO)
This program was developed by CHFA to provide financing for homebuyers who are purchasing foreclosed, abandoned or bank-owned properties in Connecticut. The goal is to help support neighborhood stabilization. A HERO loan can offer substantial benefits for qualified borrowers. As CHFA loan experts, we can help you determine whether you might qualify for a HERO loan.
We’re here to make it as easy as possible to purchase your first home. We offer a number of zero or low down payment options. We’ll match you up with one of our experienced mortgage experts, who’ll take you through the process step by step. From pre-approval to application to documentation to underwriting to closing, we’ll make it easy.
So what kind of home mortgage works best for a first-time buyer? Again, it depends on you and your circumstances. However, we find that 30-year Fixed-Rate Mortgages – offering the security of a rate that won’t change – are very popular with “first-timers.” We’ve also written many, many FHA loans – offering down payments as low as 3.5% – as well as USDA and VA zero down payment loans, for first-time buyers.
So whether you’re looking for a conventional mortgage, an FHA loan, a USDA loan, or even a VA loan, we’ll make sure your first time is a great time.