The professionals at Barclay Mortgage Services have access to a full range of loan programs that allow you to …

Mortgage Services

Fixed-Rate Mortgages Adjustable Rate Mortgages (ARMs) Home Equity Loan Home Equity Line of Credit (HELOC)

• Fixed-Rate Mortgages
  With a fixed-rate mortgage, your monthly payment of principal and interest never change for the life of your loan. Your property taxes may go up (we almost said down, too!), and so might your homeowner's insurance premium part of your monthly payment, but generally with a fixed-rate mortgage your payment will be very stable.
  
  Fixed-rate mortgages are available in all sorts of shapes and sizes: 30-year, 20-year, 15-year, even 10-year. Some fixed-rate mortgages are called "biweekly" mortgages and shorten the life of your loan. You pay every two weeks, a total of 26 payments a year, which adds up to an "extra" monthly payment every year.
  
  During the early amortization period of a fixed-rate mortgage, a large percentage of your monthly payment goes toward interest, and a much smaller part toward principal. That gradually reverses itself as the loan ages.
  You might choose a fixed-rate mortgage if you want to lock in a low rate. If you have an Adjustable Rate Mortgage (ARM) now, refinancing with a fixed-rate mortgage can give you more monthly payment stability.
  
  
• Adjustable Rate Mortgages (ARMs)
  ARMs come in even more varieties. Generally, ARMs determine what you must pay based on an outside index, perhaps the 6-month Certificate of Deposit (CD) rate, the one-year Treasury Security rate, the Federal Home Loan Bank's 11th District Cost of Funds Index (COFI), or others. They may adjust every six months or once a year.
  
  Most programs have a "cap" that protects you from your monthly payment going up too much at once. There may be a cap on how much your interest rate can go up in one period, say, no more than two percent per year, even if the underlying index goes up by more than two percent. You may have a "payment cap," that instead of capping the interest rate directly caps the amount your monthly payment can go up in one period. In addition, almost all ARM programs have a "lifetime cap", your interest rate can never exceed that cap amount, no matter what.
  
  ARMs often have their lowest, most attractive rates at the beginning of the loan, and can guarantee that rate for anywhere from a month to ten years. You may hear people talking about or read about what are called "3/1 ARMs" or "5/1 ARMs" or the like. That means that the introductory rate is set for three or five years, and then adjusts according to an index every year thereafter for the life of the loan. Loans like this are often best for people who anticipate moving, and therefore selling the house to be mortgaged, within three or five years, depending on how long the lower rate will be in effect.
  
  You might choose an ARM to take advantage of a lower introductory rate and count on either moving, refinancing again, or simply absorbing the higher rate after the introductory rate goes up. With ARMs, you do risk your rate going up, but you also take advantage when rates go down by pocketing more money each month that would otherwise have gone toward your mortgage payment.
  
  
• Home Equity Loan
  Do you need to tap into your home’s equity to pay for a home remodeling project or to pay off a credit card? A home equity loan is a fixed or adjustable rate loan that is secured by the equity in your home. With a home equity loan, you borrow a lump sum of money to be paid back monthly over a set time frame, much like your first mortgage. The terms home equity loan and second mortgage are often used interchangeably.
  
  The process for a home equity loan is similar to your first mortgage. The closing costs (often 2-3 percent of the loan amount) are usually lower and, although the interest rate is higher on a home equity loan, the interest paid is tax deductible.
  
  To qualify for second mortgage, your credit must be in good standing and you must be able to document your income. An appraisal will be required on your home to determine the home's market value.
  
  
• Home Equity Line of Credit (HELOC)
  If you need to borrow money to pay off debts or make a major purchase, a home equity line of credit can be useful. A HELOC is a form of revolving credit secured by the equity in your home. This is an open ended loan that can be paid down or charged up for the term of the loan, much like a credit card. The interest rate fluctuates (typically monthly).
  
  With a HELOC, your lender will approve you for a specific amount of credit, the maximum amount you may borrow at any one time under the plan. In determining your credit limit, your income, debts, credit history and other financial obligations will be reviewed. An appraisal will be required on your home to determine the home's market value. Your credit limit will be based on a percentage of your home's appraised value, which is then subtracted from the balance owed on your existing mortgage.
  
  When you take out a HELOC, you pay for many of the same expenses as when you financed your original mortgage, such as an application fee, title search, appraisal, attorneys' fees, and points (a percentage of the amount you borrow).
  Most HELOCs have a fixed period (5, 10, even 20 years) during which you can borrow money. Typically, you will use special checks or a credit card to draw on your line. You will be required to make a minimum payment each month, usually the interest that accrued during the draw period. However, the interest you pay is usually tax deductible. At the end of your "draw period," you will be required to pay off the loan, making monthly payments on the principal and interest.