
	Refinance Newsletter Prepared for Your Subscriber's Full Name		Courtesy of: Your Name Your Company Name Company Phone # Your Website

	A Mortgage Program Primer There are many types of mortgages available to you. I want you to better understand them so you will know which mortgage is right for you.

I want to discuss with you some of the choices you have regarding types of mortgages. Fixed Rate Mortgage A fixed rate mortgage can be for 30, 40 or sometimes for 50 years. Basically, the longer the term, the lower the mortgage payment. There is not much of a difference between a 40 year and a 50 year mortgage, as far as the payments go, as you are already close to what they would be on an interest-only mortgage. The benefit of a fixed rate mortgage is that you will know exactly what your payment will be, year after year. If rates drop, the only way you can take advantage of the lower rate is to refinance the mortgage. If the interest rate drops at least 1%, it makes sense to refinance. Interest-Only Mortgage An interest-only mortgage is a loan where you only have to pay the interest due each month, and not the principal. Typically, these mortgages will let you do interest-only for 3, 5, 7, or up to 10 years, then the mortgage either gets refinanced or you have to start paying the principal. With some of these mortgages, the rate is fixed for the duration of the term, and may be up to a quarter-point higher than what a fixed rate mortgage would be for the same credit score and loan to value. These mortgages make sense if you are expecting that appreciation will give you the equity growth that you need, instead of paying down the principal. They are also appropriate if you want to borrow the cash to invest elsewhere. In this case, there is no need to worry about paying down the balance, as you have that money invested elsewhere. Adjustable Rate Mortgage (ARM) An ARM usually has a start rate that is up to a 2 percent lower than the corresponding fixed rate for your given credit score and loan to value. The advantage is that for the first 2 or 3 years, you pay less each month than you would with a fixed rate mortgage. The risk is that rates may rise during that time, and you will then face a real payment shock after 2 or 3 years. You need to have me talk with you about the direction of interest rates so we can determine if this type of loan makes sense for you.	Option ARM An option ARM gives you 4 payment choices each month. The first is a start rate that may be as low as 1%, giving you a monthly payment as low as $321 per $100,000 borrowed). The second is an interest-only payment that is based on the fully indexed interest rate. The third option is a 30-year payment based on the full rate, and the fourth payment option is based on a 15-year payment schedule. The main benefit of this mortgage is that you can make payments that are lower than what you really owe. This is great if you are in a money crunch, or if you work on commission and need payment flexibility. The drawback is that any month where you don't make at least the interest-only payment, the difference between that payment and the minimum payment you made will be added to your principal balance. Eventually this amount will have to be paid back. I have already discussed these loans in a prior newsletter. Please call me so I can discuss if this type of loan works for you. Bi-Weekly Mortgage A bi-weekly mortgage is simply any mortgage where you make one half of the monthly mortgage payment every two weeks. Since there are 26 bi-weekly periods in a year, you end up making 13 monthly mortgage payments. This has the effect of paying extra principal on your mortgage. If you start off with a 30 year mortgage and do it on a bi-weekly basis, you will knock up to 7 years off the 30-year term. There is another way to reduce the term of your mortgage without using a bi-weekly program. Simply make additional principal payments. If you look at an amortization chart, you will see the amount of money that goes to principal and interest each month. If you take the principal due for the following month and add it to the current month's payment, you have just knocked off one month from the term of your mortgage! In the early years of a mortgage, this strategy is much easier to do, as very little of the mortgage payment goes to principal.	Rate Buy-Down Some lenders let you pay up to 2 points to buy down the interest rate of a fixed-rate mortgage. In the first year, your rate is 2 points lower, and in the second it is 1 point lower. After that, it goes to the normal rate. The advantage to this type of loan is that you may qualify for a given loan size with a lower income. In most cases, you only need to qualify at the rate that is 2 points lower than the stated rate. Conforming Loans Conforming loans have terms and conditions that follow the guidelines set forth by Fannie Mae and Freddie Mac. These two stockholder-owned corporations purchase mortgage loans complying with the guidelines from mortgage lending institutions, packages the mortgages into securities and sell the securities to investors. Fannie Mae and Freddie Mac guidelines establish the maximum loan amount, borrower credit and income requirements, down payment, and suitable properties. Jumbo Loans Loans above the maximum loan amount established by Fannie Mae and Freddie Mac are known as 'jumbo' loans. Because jumbo loans are bought and sold on a much smaller scale, they often have a little higher interest rate than conforming, but the spread between the two varies with the economy. For 2007, a jumbo loan for a single family home starts at $417,000. Sub Prime Loans Loans made to borrowers who have credit below the acceptable limits of conventional loans are considered sub-prime borrowers. These loans are packaged and sold to institutional investors such as Merrill Lynch, Barclays, and other large institutions. The rates on these loans are typically a few points higher than on conventional loans. These are just a few of the mortgage choices you may have available to you. Please call me so I can go over what type works best for you.		About My Services I would like to help you with the task of refinancing your mortgage. To do this, I am able to do the following for you: Evaluate your credit and mortgage payment history Advise you on the various types of mortgage programs Resolve any issues on your credit report that can affect your mortgage. Provide you with a complete refinance savings analysis Make sure you have all the required loan documents Provide you with a Good Faith Estimate of closing costs Keep you informed as to changes in mortgage interest rates Get copies of all your mortgage and other loan pay-offs Co-ordinate all aspects of settlement or escrow, including title search, appraisal, paperwork and other services At Your Company Name, we offer mortgages for most buyers, including ones who are self-employed or who have damaged credit. We have lenders who offer 100% financing meaning no down payment for qualified buyers. We also offer mortgages with start rates as low as 1%, making it easier to pull cash out of your home. If you have any questions about how I can help you purchase your home, please call me at Company Phone #.