Fixed Rate Mortgages
Adjustable Rate Loans
- Available in either 10, 15, 20, 25, and 30 year terms. These programs offer a fixed
rate payment throughout the duration of the specified term. Any principal reduction will
generally not lower the original loan payment, which is set at the inception of the loan. These programs are typically straightforward as there are no hidden agendas with fixed rate mortgages; if you have a specific payment for a specified period, the loan generally will be paid in full by the end of the term.
- Available for either 3, 5, 7, and 10-years of a 30-year or 40-year amortized loan. These mortgages generally offer a lower interest rate than your traditional 30-year fixed mortgage before converting into an adjustable rate mortgage. The rate and payment are set without change for the initial fixed period, then converts into either a semi or annual adjustable rate mortgage. Often to go along with the fixed term would be an interest-only feature. Similar rules would apply as specified above on the interest-only options.
Home Equity Lines of Credit (HELOC)
|30-day Avg SOFR
|US Prime Rate
|* As of November 9, 2023
Fixed Rate Seconds
- These programs are credit lines against the existing equity of a property - allowing borrowers to draw funds up to the qualified limit. Terms will vary and there will be a period within the term requiring principal and interest payments to be repaid. These types of loans can be useful to avoid mortgage insurance (better known as PMI), tap into existing equity to complete future renovations, debt consolidations, or other investment opportunities that may arise. Interest is paid only on what is used or withdrawn. If funds are not drawn, then there will be no interest payments due. HELOC's are generally tied to the U.S. prime rate. These types of mortgages can be riskier than a fixed rate second loan since they will float with the market and capping out at 18% or more. There are no periodic interest rate caps to limit the interest rate fluctuation; however, most lines of credit offer a fixed rate partition that allows the borrower to fix a portion if not all of the balance in full to a specified amortization of choice. These types of loans have grown in popularity to either pay down principal on the first mortgage to better accommodate a desired monthly payment, or simply as a security tool for emergency usage for cash.
- These programs generally offer a 15, 30, and 1 year "arm" schedules. Fixed rate second mortgages will generally offer a higher rate of interest than a first mortgage to offset lender risks of foreclosure. Similarly to the HELOC, fixed rate second mortgages have been used to avoid mortgage insurance when less than 20% down payments are desired.
| Stephen Shintani
Real Estate Broker
CalDRE Corporation #01791873
10866 Wilshire Blvd. Suite 1625
Los Angeles, CA 90024
Hawaii Branch Office NMLS ID #2471772
California Funding Group
NMLS Branch Office ID #935676
810 Silver Spur Road, Suite E
Rolling Hills Estates, CA 90274