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Types of Loans

Fixed-Rate Mortgages (FRM). In a fixed-rate mortgage loan, the interest rate and your monthly payments remain the same (fixed) for the period of the loan. The most common or typical periods for a FRM are 30 years and 15 years. Other periods for a FRM include 10, 20, or 25-years, and in some cases, longer. A feature of the payments in a "fully" amortized FRM loan is that the payments and interest are calculated so that at the end of the payment period or end of the loan term, the mortgage loan is paid in full.

Adjustable Rate Mortgages (ARM). With an ARM, the interest rate and the associated monthly payment are variable (they can fluctuate over the life of the loan). The periodic adjustments or changes are based on a defined index associated with a particular interest rate program. Examples of the most common indexes include: Treasury Bill (T-Bill), 12-Month Treasury Average (MTA or MAT), London Inter Bank Offering Rates (LIBOR), and Bank Prime Loan (Prime Rate).

Hybrid ARM Mortgages (the blending of two mortgage programs). The most common types are called 3/1, 5/1 and 7/1 Mortgages. These types of mortgages are 30-year mortgages using the features of both a fixed-rate and an adjustable-rate mortgage. For example, in a 5/1 mortgage, the "5" indicates that the rate is fixed for the first five years and then the loan becomes an adjustable rate (adjusted yearly) for the remainder of the term. In this example, for the last 25 years, the loan is an adjustable rate mortgage. The "1" indicates the adjustment period for the ARM portion of the mortgage. In a 3/1 hybrid mortgage, after the 3-year fixed period, the ARM portion of the mortgage can adjust each year. The amount of adjustment is dependent of the type of index tied to the loan program (see Adjustable Rate Mortgages above for some examples.) With a Hybrid ARM, the interest rate and the associated monthly payment are variable or can fluctuate over the life of the loan after the initial fixed-rate period.

Combo Loans. More popular variations of these loans are the 80/15 or 80/10 programs. In these cases, two separate and distinct loans or mortgage programs are used together to finance the property. The numbers represent the amount of the loan in percent of value of the property or Loan to Value (LTV). For example, with the 80/15 program on a $300,000 property, the first loan or mortgage would be $240,000 or 80% of the established property value and the second loan or mortgage would be $45,000 or 15% of the established property value. Taken together, the loans or mortgages make up 95% of established property value. The two major benefits of this type of loan are the avoidance of private mortgage insurance and the possibility of having more tax-deductible interest at the end of the year (please see your tax advisor on this subject).

Conventional Mortgage. Currently these mortgages are limited to a minimum of 5% down or a maximum of a 95% Loan to Value (LTV) due to the current economy. The current limit for these loans is $417,000.

FHA-Insured Mortgages. Nevada State Bank is an approved HUD/FHA Lender. FHA loans are perfect for the first-time home buyer and others. These loans are insured by the federal government and provide for a lower down payment. As low as of 3.5%. FHA Insured Mortgages are designed to help make home ownership possible for millions of Americans.

VA Mortgages (Department of Veterans Affairs Loans). Nevada State Bank is authorized to complete a limited number of these loans annually. These loans offer the lowest down payment and are designed to help current and former military members obtain home ownership.

Jumbo Loans. These are first mortgages with loan amounts that exceed $417,000 (for a single family residence; the limits are higher for 2-4 unit properties). These loans have a slightly higher rate of interest than a conforming mortgage (a mortgage less than $417,000) and slightly different loan criteria. Generally, the same types of loan programs are available for this category of loan program. Please contact a loan consultant for specific details.

US Department of Agriculture (USDA) Rural Housing Loan. For more information please speak to one of our loan specialists.

This Information is provided for informational purposes.  Please consult a mortgage professional for your specific situation.

Zions Bancorporation, N.A. dba Nevada State Bank NMLS #467014
PO Box 990, Las Vegas, NV  89125
Toll Free:  (866) 909-9657
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