Resources 2017-03-15T18:56:14+00:00

Loan Programs

Differences between fixed and adjustable rate loans

Fixed Rate Loan


  • Predictable fixed payments
  • Easy to amortize payments
  • Protection against rising interest rates

Recommended For

  • Homebuyers who prefer regular, fixed payments
  • Homebuyers with fixed income
  • Homebuyers who plan to stay in their home for many years

With a fixed rate loan, your monthly payment stays the same for the entire duration of the loan. The portion of the payment that goes toward your principal (the loan amount) will increase, but the amount you pay in interest will decrease in the same amount. As your property taxes increase (or rarely decrease) so will the homeowner’s insurance in your monthly payment. But generally, payment amounts for a fixed rate mortgage are very stable.

When you first take out a fixed rate mortgage loan, most of the payment goes toward interest. As you pay, more of your payment goes toward principal.

People often choose a fixed rate loan because interest rates are low and they wish to lock in the low rate. If you have an adjustable rate mortgage (ARM) now, refinancing to a fixed rate loan can offer more monthly payment stability, and we’d love to assist you to lock in a fixed rate at a good rate.

Adjustable Rate Loan


  • Early term low monthly payments
  • Lower start payments can allow larger loans
  • A variety of initial fixed rate options

Recommended For

  • Homebuyers who want to save money in the short run
  • Homebuyers who want to move in a few years
  • Homebuyers who desire a lower loan payment

ARMs, as we call them, come in even more varieties. ARMs are generally adjusted twice a year, based on various indexes.

The majority of ARMs feature this cap, which means they can’t increase over a specific amount in a given period. There may be a cap on interest rate increases over the course of a year—for example: no more than a couple of percent a year, even if the index the rate is based on goes up by more than 2 percent. Sometimes an ARM features a payment cap that ensures your payment can’t go above a fixed amount over the course of a given year. Most ARMs also cap your interest rate over the duration of the loan.

ARMs most often feature the lowest, most attractive rates toward the start. They guarantee the lower rate from a month to 10 years. You’ve probably heard of 3/1 or 5/1 ARMs. For these loans, the initial rate is set for three or five years. After this period, it adjusts every year. These kinds of loans are fixed for a certain number of years (three or five), and then they adjust. Loans like this are often best for people who anticipate moving within three or five years. These types of ARMs most benefit borrowers who will move before the loan adjusts.

You might choose an adjustable rate mortgage to take advantage of a lower initial rate if you’re counting on moving, refinancing or absorbing the higher rate after the introductory rate expires. ARMs are risky if property values decrease and borrowers cannot sell or refinance their loan.

FHA Loan


  • Low down payment
  • Flexible income, debt, and credit requirements
  • Use gift funds to help with your downpayment, contact your mortgage professional to learn more about this benefit

Recommended For

  • Homebuyers with limited savings
  • Low to moderate income homebuyers

Available to all buyers (not just first timers), an FHA Home Loan is insured by the Federal Housing Administration, a federal agency within the U.S. Department of Housing and Urban Development. FHA Home Loan programs are designed to help creditworthy low- and moderate-income families who do not meet the requirements for conventional loans.

FHA Home Loan programs are particularly beneficial to those buyers with less available cash. The rates on FHA Home Loans are generally market rates, while down payment requirements are lower than for conventional loans.

Note: The FHA does not loan money to borrowers, rather it provides lenders protection through mortgage insurance in case the borrower defaults on his or her loan obligations.

Some of the other benefits of FHA financing:

  • Only a 3.5 percent down payment is required
  • Closing costs can be paid for by the seller
  • More flexible underwriting criteria than conventional loans
  • More flexible on credit than conventional loans

First-Time Homebuyer Loan Programs:

If you’re just starting the search for your first home, then maybe you’ve seen the term “first-time homebuyer” bandied about. The true definition of a first-time home buyer is someone who has not owned a home in the last three years. So in practice, many loans out there are appropriate for just about any home buyer. That said, most true first-time home buyers do not have a down payment saved up and that’s why the following first-time homebuyer loan programs are great for individuals and families in the market for their first home:

  • FHA
  • USDA

FHA Loan

Available to all buyers (not just first timers), an FHA loan is insured by the Federal Housing Administration, a federal agency within the U.S. Department of Housing and Urban Development. FHA loan programs are designed to help creditworthy low- and moderate-income families who do not meet the requirements for conventional loans.

FHA loan programs are particularly beneficial to those buyers with less available cash. The rates on FHA loans are generally market rates, while down payment requirements are lower than for conventional loans.

Note: The FHA does not loan money to borrowers, rather it provides lenders protection through mortgage insurance in case the borrower defaults on his or her loan obligations.

Some of the other benefits of FHA financing:

  • Only a 3.5 percent down payment is required
  • Closing costs can be paid for by the seller
  • More flexible underwriting criteria than conventional loans
  • More flexible on credit than conventional loans

First Down Loan Program

The First Down loan program is a great option if you don’t have a lot of money for a down payment because it only requires .5 percent down.

If you do not want to live in the rural areas where USDA is an option or you are not a veteran, a First Down loan offers a low down payment option for borrowers. If used with an FHA loan, then there is a 3 percent second mortgage that is used for the balance of the required down payment of 3.5 percent for FHA loans.

Some fine print:

  • Requires a 620 middle credit score
  • There are some income restrictions based on the county you live in.
  • Seller can pay up to 6 percent of the sales price towards your closing costs
  • Condos must be on FHA “approved” condo list
  • Manufactured homes are ineligible properties

USDA Rural Housing

Does your dream home reside in a more spacious rural or quiet suburban area? If you’re drawn to the countryside and do not own a home yet, a USDA Rural Development loan may be the perfect fit for you—especially if you don’t have money for a down payment.

Designed to help low- to moderate-income people who want to move to more rural areas, this is a no money down loan program but it does have a few restrictions including:

  • Property location
  • Income limits

This loan is only available in certain areas and your income limits are determined based on the county where the property resides. Find out more about income and property eligibility here, or give us a call and fill out a loan application and we can help you determine if you are eligible.

VA Loan


  • No down payment required
  • Flexible income, debt, and credit requirements

Recommended For

  • Qualified veterans, reservists, active service members and their spouses
  • Eligible first or second time homebuyers who have low to moderate income

VA loans are guaranteed by the U.S. Department of Veteran Affairs (VA) to eligible veterans for the purchase of a home. The guaranty means the lender is protected against loss—meaning you won’t lose your home—if you fail to repay the loan. In most cases, no down payment is required on a VA guaranteed loan and the borrower usually receives a lower interest rate than is ordinarily available with other loans.

Other benefits of a VA loan include:

  • Closing costs are comparable and sometimes lower than other financing types
  • No private mortgage insurance requirement: This is the big reason to use a VA loan
  • Right to prepay loan without penalties
  • The mortgage can be taken over (or assumed) by the buyer when a home is sold
  • Counseling and assistance available to veteran borrowers having financial difficulty or facing default on their loan

Some fine print:

  • Although mortgage insurance is not required, the VA charges a funding fee to issue a guarantee to a lender against borrower default on a mortgage. The fee may be paid in cash by the buyer or seller, or it may be financed in the loan amount.

Veterans can apply for a VA loan with any mortgage lender that participates in the VA home loan program. We have several veterans on our team and know these veteran and VA loans inside and out.

Refinancing Your Home

If you’re considering refinancing your home, we can match you with the loan program that is ideal for you, but first: What do you hope to achieve from refinancing your home? Considering the following will help you narrow your choices:

Lowering Your Payments

Is the purpose of refinancing your home primarily to lower your rate and monthly payments? Then a low, fixed rate loan may be your best option. An adjustable rate mortgage (ARM) or fixed mortgage with a high rate are loan programs that might fit you. Even if interest rates rise, a fixed rate mortgage loan will stay at the same low rate, unlike an ARM. If you aren’t expecting to sell your home in the near future (about five years), a fixed rate mortgage can especially be a wise choice. But if you do plan to sell your home in the coming years, you will want to consider an ARM with a low initial rate to lower your payments.

Cashing Out

Is cashing out the primary reason for refinancing your home? Perhaps you’re going on a much needed vacation; you have to pay tuition for your college-bound child; or you plan to renovate your home. If this is the case, you’ll need to get a loan for more than the remaining balance on your present mortgage loan.Then you’ll need to qualify for a loan for a higher amount than the remaining balance with your existing mortgage. If you’ve had your current mortgage for quite a while and/or have a high interest mortgage, you may be able to do this without making your mortgage payment higher.

Debt Consolidation

Maybe you’d like to pull out a portion of the equity in your home (cash out) to put toward other debt. If you have built up some equity, paying off other debt with rates higher than your mortgage (credit cards or home equity loans, for example) might be able to save you a chunk of money every month.

Build Up Equity Faster

Are you dreaming of paying off your loan faster while beefing up your equity? If this is your goal, your refinance loan can switch you to a loan program with a shorter loan period—for example, a 15-year loan. Even though your monthly payments will usually increase, you will be paying less interest so your equity amount will go up faster. On the other hand, if your existing longer-term mortgage loan has a low balance remaining and was closed a while ago, you may even be able to make the change without paying more each month.

To help you figure out your options and the numerous benefits of refinancing your home, please contact us. We are here for you.

Want to know more about refinancing? Call the Peak Mortgage location near you or simply click this link to get started!

Reverse mortgage financing:

Your retirement funds may come from savings, investment income, and Social Security. But now, there’s another source that may help you complete the longevity-planning puzzle.

Reverse mortgages are increasingly recognized by savvy homeowners and financial advisors as a smart and safe way to leverage an important retirement asset: home equity. Peak Mortgage makes the process seamless and simple. We’re experts in reverse mortgage financing. And we’re dedicated to helping people learn more about this versatile financial instrument, which can help strengthen and lengthen a retirement plan.

What is a reverse mortgage?

Available exclusively to homeowners and homebuyers age 62 and older, a reverse mortgage allows you to convert a portion of your home equity into tax-free* funds—so you can live more comfortably, in your own home, with greater financial flexibility. Originally created in the 1980s, recent product advances and program improvements have transformed the reverse mortgage into a safe and effective retirement financing tool. For example, you can use a reverse mortgage to:

  • Establish a “stand-by” line of credit that you can tap as needed. Unlike a traditional Home Equity Line of Credit (HELOC), a reverse mortgage line of credit cannot be reduced or revoked, as long as the terms of the loan are met. And the unused line of credit grows over time.
  • Avoid selling investments at a loss in a “down” market
  • Supplement retirement income with a steady stream of tax-free* funds
  • Delay collecting Social Security, for a larger monthly benefit
  • Pay for medical or long-term care costs
  • Pay off an existing mortgage and/or other debts, to improve cash flow
  • Finance the purchase of a more suitable home, with no monthly mortgage payments

Among the benefits:

  • The ability to use your home equity to help maintain a more comfortable standard of living, in your own home.
  • Tax-free* proceeds you can use however you choose.
  • Great flexibility. You can take your proceeds as a line of credit; monthly advances for a set period of time; a monthly stream of funds for as long as you live in your home; a lump sum; or a combination of these options. You choose the plan that works best for you.
  • No monthly mortgage payments. If you qualify and have an existing mortgage, home equity loan or any other type of debt, you can pay it off and improve your monthly cash flow, with no minimum monthly loan payments. (As the homeowner, you remain responsible for paying property taxes, homeowners insurance, and homeowner’s association dues if applicable.)

To learn more, contact us today.

As you explore your reverse mortgage options with Peak Mortgage, a licensed Reverse Mortgage Specialist will serve as your guide through the entire process. We’ll answer all your questions, give you detailed calculations, and help you make well-informed decisions that are in your best interests.

* Not tax advice. Consult a tax professional.

This material is not from HUD or FHA and has not been approved by HUD or any government agency.



a feature of the home or property that serves as a benefit to the buyer but that is not necessary to its use; may be natural (like location, woods, water) or man-made (like swimming pool or garden.)


repayment of a mortgage loan through monthly installments of principal and interest; the monthly payment amount is based on a schedule that will allow you to own your home at the end of a specific time period (for example, 15 or 30 years).

Annual Percentage Rate (APR)

calculated by using a standard formula, the APR shows the cost of a loan; expressed as a yearly interest rate, it includes the interest, points, mortgage insurance, and other fees associated with the loan.


the first step in the official loan approval process; this form is used to record important information about the potential borrower necessary to the underwriting process.


a document that gives an estimate of a property’s fair market value; an appraisal is generally required by a lender before loan approval to ensure that the mortgage loan amount is not more than the value of the property.


a qualified individual who uses his or her experience and knowledge to prepare the appraisal estimate.


Adjustable Rate Mortgage; a mortgage loan subject to changes in interest rates; when rates change, ARM monthly payments increase or decrease at intervals determined by the lender; the change in monthly-payment amount, however, is usually subject to a cap.


a government official who is responsible for determining the value of a property for the purpose of taxation.

Assumable mortgage

a mortgage that can be transferred from a seller to a buyer; once the loan is assumed by the buyer the seller is no longer responsible for repaying it; there may be a fee and/or a credit package involved in the transfer of a an assumable mortgage.

Balloon Mortgage

a mortgage that typically offers low rates for an initial period of time (usually 5, 7, or 10 years); after that time period elapses, the balance is due or is refinanced by the borrower.


a federal law whereby a person’s assets are turned over to a trustee and used to pay off outstanding debts; this usually occurs when someone owes more than they have the ability to repay.


a person who has been approved to receive a loan and is then obligated to repay it and any additional fees according to the loan terms.

Building code

based on agreed upon safety standards within a specific area, a building code is a regulation that determines the design, construction, and materials used in building.


a detailed record of all income earned and spent during a specific period of time.


a limit, such as that placed on an adjustable rate mortgage, on how much a monthly payment or interest rate can increase or decrease.

Cash reserves

a cash amount sometimes required to be held in reserve in addition to the down payment and closing costs; the amount is determined by the lender.

Certificate of title

a document provided by a qualified source (such as a title company) that shows the property legally belongs to the current owner; before the title is transferred at closing, it should be clear and free of all liens or other claims.


also known as settlement, this is the time at which the property is formally sold and transferred from the seller to the buyer; it is at this time that the borrower takes on the loan obligation, pays all closing costs, and receives title from the seller.

Closing costs

customary costs above and beyond the sale price of the property that must be paid to cover the transfer of ownership at closing; these costs generally vary by geographic location and are typically detailed to the borrower after submission of a loan application.


an amount, usually a percentage of the property sales price, that is collected by a real estate professional as a fee for negotiating the transaction.


a form of ownership in which individuals purchase and own a unit of housing in a multi-unit complex; the owner also shares financial responsibility for common areas.

Conventional loan

a private sector loan, one that is not guaranteed or insured by the U.S. government.

Cooperative (Co-op)

residents purchase stock in a cooperative corporation that owns a structure; each stockholder is then entitled to live in a specific unit of the structure and is responsible for paying a portion of the loan.

Credit history

history of an individual’s debt payment; lenders use this information to gauge a potential borrower’s ability to repay a loan.

Credit report

a record that lists all past and present debts and the timeliness of their repayment; it documents an individual’s credit history.

Credit bureau score

a number representing the possibility a borrower may default; it is based upon credit history and is used to determine ability to qualify for a mortgage loan.

Debt-to-income ratio

a comparison of gross income to housing and non-housing expenses; with the FHA, the monthly mortgage payment should be no more than 29% of monthly gross income (before taxes) and the mortgage payment combined with non-housing debts should not exceed 41% of income.


the document that transfers ownership of a property.


the inability to pay monthly mortgage payments in a timely manner or to otherwise meet the mortgage terms.


failure of a borrower to make timely mortgage payments under a loan agreement.

Discount point

normally paid at closing and generally calculated to be equivalent to 1% of the total loan amount, discount points are paid to reduce the interest rate on a loan.

Down payment

the portion of a home’s purchase price that is paid in cash and is not part of the mortgage loan.

Earnest money

money put down by a potential buyer to show that he or she is serious about purchasing the home; it becomes part of the down payment if the offer is accepted, is returned if the offer is rejected, or is forfeited if the buyer pulls out of the deal.


Energy Efficient Mortgage; an FHA program that helps homebuyers save money on utility bills by enabling them to finance the cost of adding energy efficiency features to a new or existing home as part of the home purchase.


an owner’s financial interest in a property; calculated by subtracting the amount still owed on the mortgage loan(s) from the fair market value of the property.

Escrow account

a separate account into which the lender puts a portion of each monthly mortgage payment; an escrow account provides the funds needed for such expenses as property taxes, homeowners insurance, mortgage insurance, etc.

Fair Housing Act

a law that prohibits discrimination in all facets of the home buying process on the basis of race, color, national origin, religion, sex, familial status, or disability.

Fair market value

the hypothetical price that a willing buyer and seller will agree upon when they are acting freely, carefully, and with complete knowledge of the situation.

Fannnie Mae

Federal National Mortgage Association (FNMA); a federally-chartered enterprise owned by private stockholders that purchases residential mortgages and converts them into securities for sale to investors; by purchasing mortgages, Fannie Mae supplies funds that lenders may loan to potential home buyers.


Federal Housing Administration; established in 1934 to advance home ownership opportunities for all Americans; assists home buyers by providing mortgage insurance to lenders to cover most losses that may occur when a borrower defaults; this encourages lenders to make loans to borrowers who might not qualify for conventional mortgages.

Fixed-rate mortgage

a mortgage with payments that remain the same throughout the life of the loan because the interest rate and other terms are fixed and do not change.

Flood insurance

insurance that protects homeowners against losses from a flood; if a home is located in a flood plain, the lender will require flood insurance before approving a loan.


a legal process in which mortgaged property is sold to pay the loan of the defaulting borrower.

Freddie Mac

Federal Home Loan Mortgage Corporation (FHLMC); a federally-chartered corporation that purchases residential mortgages, securitizes them, and sells them to investors; this provides lenders with funds for new home buyers.

Ginnie Mae

Government National Mortgage Association (GNMA); a government-owned corporation overseen by the U.S. Department of Housing and Urban Development, Ginnie Mae pools FHA-insured and VA-guaranteed loans to back securities for private investment; as with Fannie Mae and Freddie Mac, the investment income provides funding that may then be lent to eligible borrowers by lenders.

Good faith estimate

an estimate of all closing fees including pre-paid and escrow items as well as lender charges; must be given to the borrower within three days after submission of a loan application.


Home buyer Education Learning Program; an educational program from the FHA that counsels people about the home buying proceeds; HELP covers topics like budgeting, finding a home, getting a loan, and home maintenance; in most cases, completion of the program may entitle the Home buyer to a reduced initial FHA mortgage insurance premium-from 2.25% to 1.75% of the home purchase price.

Home inspection

an examination of the structure and mechanical systems to determine a home’s safety; makes the potential Home buyer aware of any repairs that may be needed.

Home warranty

offers protection for mechanical systems and attached appliances against unexpected repairs not covered by homeowner’s insurance; coverage extends over a specific time period and does not cover the home’s structure.

Homeowner’s insurance

an insurance policy that combines protection against damage to a dwelling and its contents with protection against claims of negligence or inappropriate action that result in someone’s injury or property damage.

Housing counseling agency

provides counseling and assistance to individuals on a variety of issues, including loan default, fair housing, and home buying.


the U.S. Department of Housing and Urban Development; established in 1965, HUD works to create a decent home and suitable living environment for all Americans’; it does this by addressing housing needs, improving and developing American communities, and enforcing fair housing laws.

HUD1 Statement

also knows as the “settlement sheet”, it itemizes all closing costs; must be given to the borrower at or before closing.


Heating, Ventilation and Air Conditioning; a home’s heating and cooling system.


a measurement used by lenders to determine changes to the Interest rate charged on an adjustable rate mortgage.


the number of dollars in circulation exceeds the amount of goods and services available for purchase; inflation results in a decrease in the dollar’s value.


a fee charged for the use of money.

Interest rate

the amount of interest charged on a monthly loan payment; usually expressed as a percentage.


protection against a specific loss over a period of time that is secured by the payment of a regularly scheduled premium.


a legal decision; when requiring debt repayment, a judgment may include a property lien that secures the creditor’s claim by providing a collateral source.

Lease purchase

assists low-to-moderate income buyers in purchasing a home by allowing them to lease a home with an option to buy; the rent payment is made up of the monthly rental payment plus an additional amount that is credited to an account for use as a down payment.


a legal claim against property that must be satisfied when the property is sold.


money borrowed that is usually repaid with interest.

Loan fraud

purposely giving incorrect information on a loan application in order to better qualify for a loan; may result in civil liability or criminal penalties.

Loan-to-value (LTV) ratio

a percentage calculated by dividing the amount borrowed by the price or appraised value of the home to be purchased; the higher the LTV, the less cash a borrower is required to pay as down payment.


since interest rates can change frequently, many lenders offer an interest rate lock-in that guarantees a specific interest rate if the loan is closed within a specific time.

Loss mitigation

a process to avoid foreclosure; the lender tries to help a borrower who has been unable to make loan payments and is in danger of defaulting on his or her loan.


an amount the lender adds to an index to determine the interest rate on an adjustable rate mortgage.


a lien on the property that secures the promise to repay a loan.

Mortgage banker

a company that originates loans and resells them to secondary mortgage lenders like Fannie Mae or Freddie Mac.

Mortgage broker

a firm that originates and processes loans for a number of lenders.

Mortgage insurance

a policy that protects lenders against some or most of the losses that can occur when a borrower defaults on a mortgage loan; mortgage insurance is required primarily for borrowers with a down payment of less than 20% of the home’s purchase price.

Mortgage insurance premium (MIP)

a monthly payment, usually part of the mortgage payment, paid by a borrower for mortgage insurance.


indication by a potential buyer of a willingness to purchase a home at a specific price; generally put forth in writing.


the process of preparing, submitting, and evaluating a loan application; generally includes a credit check, verification of employment, and a property appraisal.

Origination fee

the charge for originating a loan; is usually calculated in the form of points and paid at closing.

PITI – Principal, Interest, Taxes, and Insurance

the four elements of a monthly mortgage payment; payments of principal and interest go directly towards repaying the loan while the portion that covers taxes and insurance (homeowner’s and mortgage, if applicable) goes into an escrow account to cover the fees when they are due.


Private Mortgage Insurance; privately-owned companies that offer standard and special affordable mortgage insurance programs for qualified borrowers with down payments of less than 20% of a purchase price.


lender commits to lend to a potential borrower; commitment remains as long as the borrower still meets the qualification requirements at the time of purchase.


a lender informally determines the maximum amount an individual is eligible to borrow.


an amount paid on a regular schedule by a policyholder that maintains insurance coverage.


payment of the mortgage loan before the scheduled due date; may be subject to a prepayment penalty.


the amount borrowed from a lender; doesn’t include interest or additional fees.


a radioactive gas found in some homes that, if occurring in strong enough concentrations, can cause health problems.

Real estate agent

an individual who is licensed to negotiate and arrange real estate sales; works for a real estate broker.


a real estate agent or broker who is a member of the NATIONAL ASSOCIATION OF REALTORS, and it’s local and state associations.


paying off one loan by obtaining another; refinancing is generally done to secure better loan terms (like a lower interest rate).

Rehabilitation mortgage

a mortgage that covers the costs of rehabilitating (repairing or improving) a property; some rehabilitation mortgages – like the FHA’s 203(k) – allow a borrower to roll the costs of rehabilitation and home purchase into one mortgage loan.


Real Estate Settlement Procedures Act; a law protecting consumers from abuses during the residential real estate purchase and loan process by requiring lenders to disclose all settlement costs, practices, and relationships.


another name for closing.


to place in a rank of lesser importance or to make one claim secondary to another.


a property diagram that indicates legal boundaries, easements, encroachments, rights of way, improvement locations, etc.

Sweat equity

using labor to build or improve a property as part of the down payment.

Title insurance

insurance that protects the lender against any claims that arise from arguments about ownership of the property; also available for home buyers.

Title search

a check of public records to be sure that the seller is the recognized owner of the real estate and that there are no unsettled liens or other claims against the property.


a federal law obligating a lender to give full written disclosure of all fees, terms, and conditions associated with the loan initial period and then adjusts to another rate that lasts for the term of the loan.


the process of analyzing a loan application to determine the amount of risk involved in making the loan; it includes a review of the potential borrower’s credit history and a judgment of the property value.


Department of Veterans Affairs: a federal agency which guarantees loans made to veterans; similar to mortgage insurance, a loan guarantee protects lenders against loss that may result from a borrower default.