Mortgage Basics

Choosing a Mortgage

Why should I buy a home?

Home ownership is often called the "American Dream" because of the pride that comes with owning a place you can personalize and call your own. In addition, buying a home is one of the most stable and solid investments providing tax benefits and allowing you to build equity.

Learn more about the Benefits of Home Ownership     Try our Rent vs. Own calculator

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Should I choose a fixed rate or adjustable rate loan?

Fixed rate loans have a stated interest rate that does not change over the life of the loan, whereas the rates on adjustable rate loans are linked to an index and change as the index rate changes. Many mortgages, such as a 5-Year Fixed (30 Year), start as a fixed rate loan and then convert to an adjustable rate. Adjustable rate loans have more risk due to the possibility that the interest rate could increase. However, because you are assuming some of the risk the lender will generally reward you with a lower interest rate. These loans are best for borrowers who do not plan on keeping the loan for the full term.

Learn more about fixed and adjustable rate mortgages

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When does it make sense to pay points?

Points are a one-time fee that a borrower pays to lower the interest rate. Points are defined as a percentage of your loan amount, with one point being equal to one percent of your loan. For example, if you borrow $200,000, one point would be equal to $2,000. Paying one point will generally reduce your interest rate by approximately .25%.

An alternative to paying points is to receive a "credit" from the lender in exchange for a higher interest rate. Whereas points are added to your closing costs, a credit is used to reduce your closing costs. Once again, you can receive a credit of approximately one point by raising your interest rate .25%.

Whether you choose to pay points or receive a credit, this amount will be applied to your closing costs when your loan funds.

Learn more about points

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Should I consider an Interest-Only loan option?

Interest-Only loans are a good means of either increasing your home purchasing power or maximizing your flexibility to control cash flow. You can save significant amounts of cash for investment, savings, or other expenditures during the first ten years of your loan. This is also a solid strategy to maximize tax deductibility, with more funds available for paying down higher cost, nondeductible consumer debt. With these loans, the minimum payment required covers interest only-you decide how much or how little of the principal to repay each month. These loans should not be confused with negative amortization loans-with Interest-Only the principal balance NEVER increases.

Learn more about Interest-Only loans

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Is a Closing Cash Saver loan for me?

E-LOAN's Closing Cash Saver loan is designed to provide you with a rebate to cover your non-recurring closing costs. While these loans are most commonly associated with refinances, they can also apply to purchases. Closing Cash Saver loans will generally have a higher interest rate than loans in which you pay closing costs out of pocket. Consequently they are a good option for borrowers that plan to keep their mortgage for less than five years.

Learn more about Closing Cash Saver refinance and purchase loans

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Should I choose a loan with negative amortization?

E-LOAN generally recommends that people stay away from these types of loans due to the high risk. Most adjustable rate mortgages (ARM) adjust the payment when the interest rate changes. However, negative amortization ARMs have a fixed payment option, even when the interest rate increases. Therefore it is possible that the total loan balance may actually grow over time.

Learn more about negative amortization

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How can I be sure my mortgage choice will be the best financial option?

E-LOAN believes that you should treat your mortgage as an investment. For most people their home will be their biggest investment for the future. A mortgage payment is a type of "forced saving" that many people will count on for retirement. In addition, the tax savings from writing off the interest will greatly reduce the yearly cost of your mortgage payments.

Learn more about how to make the best financial choice

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Working with E-LOAN

What is the process for getting a loan?

The loan process is slightly different for every person, and at E-LOAN we recognize that each loan is unique. However, there is a pattern to the loan process, and you should know what to expect before you decide to apply. At E-LOAN, your mortgage is assigned a loan consultant who will personally assist you through the entire process and help you close your loan in as little as ten business days.

To talk to a loan consultant now call 1-888-533-5333       Learn more about the process of getting a loan from E-LOAN

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What types of loans does E-LOAN offer?

E-LOAN offers a wide range of products to meet all your financing needs, from 30-year fixed rate mortgages to adjustable rate mortgages and home equity loans.

View our loan product list

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How is E-LOAN different from traditional mortgage lenders?

E-LOAN was founded on the principal of offering its customers the best loan selection and price, while maintaining superior service. E-LOAN gives you more control over the decision making process, since you are fully informed of the loan options available and kept up to date on the loan's progress 24 hours a day through your loan consultant and our personalized, password-protected online tracking system (E-Track). Unlike traditional brokers, at E-LOAN you do not pay commissions to your Loan Consultants, providing you substantial savings. Our goal is to offer better service, no hidden fees, greater control and a streamlined process.

Learn more about the E-LOAN difference

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