Remember when being in the mortgage business was considered to be a “creative” industry? Only a few years ago some lenders were getting kooky with their interest-only loans and option ARMs. At the time, borrowers thought doing business this way was “smart” but were of course proven wrong during subsequent years.

So now what? Back to the cookie cutter mortgages where you have a few small options and if your situation doesn’t gel with the establishment; too bad? Not so fast. Sure lenders, such as AmeriFirst are being (and have been ) extremely conservative and careful about mortgage loans, however having options doesn’t mean that we’re going rogue and will start providing crazy products either.

For example, the June issue of Money Magazine details specific situations where the borrower needs a loan, but doesn’t necessarily understand how to achieve his or her goals with the traditional product.

• Those who want to build equity. In the first instance, the borrower wants to build equity faster. Money Magazine experts suggest looking into a 15-year fixed-rate mortgage. Jim Pair, president of the National Association of Mortgage Brokers, says that you will accrue equity faster with a 15 year product versus a 30 year. Plus you’ll save a tremendous amount of money in interest payments over the life of the loan. The only “stick” to this theory is that you’ll pay a little more every month than with a 30 year product. If you can swing it, it might be the best deal.
   
• Borrowers on the move. Another situation relates to those who believe they will move in five years or less. Money Magazine experts believe that a five-year hybrid adjustable-rate mortgage might be your best bet. Currently the five year fixed 5/1 ARM is the perfect solution for those who don’t plan to stay in one place very long, says Rick Allen, product manager with Mortgage Marvel. The drawback with this strategy is that you can’t sell before the five-year term is up because then your rate could increase. It’s a good idea to have a nest egg of cash just in case.
   
• Wanting to buy a home without having 20% for a down payment. Finally, what if you don’t have 20% to use for a down payment on the home? The solution—the FHA loan. Because of stringent lending guidelines, it’s difficult to obtain a loan without a 20% down payment. However, with an FHA loan you can put down as little as 3.5%. It’s important to remember when you go through the FHA there is a fee of 2.25% of the loan up front, plus 0.5% a year for the first five years or until you have 22% equity in your home.

As you can see, one size does not fit all, but you can leverage traditional mortgage products to your advantage and customize them to your specific situation. At AmeriFirst, we’ll help you every step of the way and advise you on which product is most advantageous for your borrowing needs. For more information about our programs or about AmeriFirst call us at 800-466-5626.

Reference: Max, Sarah. “Find a Mortgage Tailor-Made for You.” Money Magazine. 2010 June.