What NJ Loan Programs are Available?

Historically, mortgage-lending options were limited. The 30-year fixed rate loan was the most popular and widely used mortgage loan program. In fact, most buyers seeking NJ loan programs needed not look any further than the 30-year fixed. However, as times change, so usually do all of the product options. Thirty-year fixed rate loans are pretty straightforward, the only difference being the interest rate. Today, it is important that you know that these are not the only NJ loan programs available. There are other NJ loan programs available, options that may be more appealing to your personal financial situation.

Adjustable Rate Mortgages

These NJ loan programs help leverage mortgage buying power and minimize monthly payments. These are especially attractive loans if you know you will only be in your home for a limited number of years. However, unlike the fixed rate mortgage, all adjustable rate mortgages are not the same. Therefore, it is imperative that you consult with your mortgage lender to make sure you understand all of the details of the loan.

Interest Only

This option allows the buyer to keep their mortgage payment low. Traditional 30-year fixed loans work by dividing up your mortgage payment towards principal and interest. Over the life of the mortgage loan, the principal loan is reduced and then paid off. The interest only NJ loan programs requires you to only pay interest for a predetermined period. After this period of time, the loan transitions into a traditional loan. The benefit of this loan is that during this initial predetermined period of interest only payments, your overall payments are greatly reduced when compared to a loan with principal and interest. This type of loan can maximize buying power, counteract interest rate increases, but on the flip side minimizes the amount of equity built into the home because of the lack of principal paid.

Piggybacks for NJ Loan Programs

A piggyback loan is a combination of a 1st mortgage followed by a second lien. It is most often used to eliminate the need for mortgage insurance. If you are borrowing more than 80% of the value of the home, generally the lender requires an additional fee tacked onto the mortgage entitled "mortgage insurance." The piggyback loan allows you to borrow 80% of the value of the home in the first lien and the excess amount in the second mortgage. The combination actually amounts to less than if you paid your initial mortgage with the additional mortgage insurance - and it also allows you to maximize your end-of-year tax deduction.

Low to Moderate Income and Properties

There are various programs available in order to qualify you as a borrower and the interested properties. In general, any low income to moderate-income borrower or property in a low or moderate census tract may be eligible for an interest rate reduction. These reductions can be as significant as 1%. There may even be additional assistance such as minimum down payment requirements and underwriting flexibility.

Considerations for NJ Loan Programs

Any large investment requires careful thought, so make sure you take your time when choosing your lender and mortgage loan option. It's not only important that you enjoy the house you purchase, but also that you can afford it.