Home Loans

The key in choosing a loan that best fits your needs is to evaluate your finances and choose the best type of loan that fits your budget and your long- or short-term investment strategy. A mistake that many consumers make is to choose the type of loan that will allow them to buy the house they want without fully understanding the terms associated with lower-interest rate loans. This section is to inform readers about the most common loan types available and to map out the pros and cons.

There are two basic categories of mortgages: the fixed-rate and the adjustable-rate mortgage (ARM). Within these categories, there are many variations. However, in nearly all mortgages, two factors are usually at odds: how predictable the payments are and how low, or affordable, they are at least initially.

Borrowers choose fixed-rate loans because the mortgage payments are steady and predictable, allowing for easier household budgeting and planning. But in so doing, they give up a lower initial mortgage payment.

Borrowers choose adjustable-rate mortgages because the mortgage payments are initially lower. A lower initial payment makes the home more affordable at first, but the borrower must also be willing to accept the risk of — and be confident in their ability to afford — an increased mortgage payment, sometimes significantly higher. In some cases, there’s even the possibility of an increasing loan balance or negative amortization.

To recap, getting a loan with adjustable payments results in lower payments at first but exposes you to some risk of high payments later. On the other hand, locking in steady predictable payments gives you a higher initial payment than the ARM, but you know exactly what you owe in principal and interest at any given time.

CU Lending - 1120 2nd Street., STE 118 Brentwood, CA 94513 Office Phone: Call (888) 899-7822 Fax: (925) 405-3754
CU Lending - 1320 Willow pass Road, Suite 710 Concord, CA 94520 Phone: Call (888) 899-7822
Equal Housing Opportunity Lender. Not a commitment to lend. Rates and programs are subject to change. Licensed by the Department of Business Oversight.
Brentwood, CA NMLS #385320 | Concord NMLS #930622