Different Types of Home Mortgage Loans Specific Purpose: After listening to my speech the audience will know what a mortgage is and understand the basic concept of the different types of home loans available today. Thesis Statement: Today I hope to be able to help the audience have a basic understanding of the different types of home mortgage loans. INTRODUCTION: I. Attention: A home mortgage is probably the single largest financial commitment that you will ever make; so selecting the right mortgage could make a huge difference in your monthly payments and the overall cost of your loan. Psychological personal impact and Economic personal impact) II. Introduce Topic: I believe In order to make sure you are choosing the right type of loan that is right for you and meets your financial goals, you must first understand the different types of mortgages available to you and how each one may change your monthly payments in the future. (Psychological personal impact and Economic personal impact) III. Relate Topic to Audience: I bet most of you in this audience today either own a home already, or have intentions of owning a home in the future.
Psychological personal impact) IV. Speaker Ethos: I have been in the mortgage industry for almost 12 years and I am currently a processing and underwriting supervisor who overlooks the overall loan process from start to finish. V. Preview of Main Points: a. What is the definition of a Mortgage and a promissory note? (Fannie Mae mortgage basics) (Merriam-Webster) b. Conventional Mortgages (Home Loans 101) c. Government Mortgages (Home Loans 101) So now I am going to give a brief overview of what a mortgage is) BODY I. What is the definition of a Mortgage and a promissory note? a. Mortgage (also known as: mortgage deed) a conveyance of or lien against property (as for securing a loan) that becomes void upon payment or performance according to stipulated terms. (Fannie Mae mortgage basics) b. Promissory note is a legal document that evidences a debt and a promise to repay (usually in monthly payments) this usually provides you with your oan amount and terms and conditions of the loan. (Merriam-Webster) c. If you fail to meet the terms and conditions of your note then your loan will go in default and the lender can take back the property (also known as foreclosure). (Now that you understand what a mortgage is I want to talk about a few of the different type of mortgages) II. Conventional Mortgage Loans: Are given to a buyer or homeowner by a mortgage lender or bank and are of the following types. d.
Conforming- are eligible for purchase by the two major federal agencies, Fannie Mae and Freddie Mac, and have a loan amount under $417,000 for a single family home in most states and $625,500 for single family homes within certain counties in specific high cost metropolitan areas. (proximity) (Federal Housing Finance Agency – Conforming Loan Limit) i. Fixed rate – The interest rate and monthly mortgage payment remain unchanged throughout the term of the mortgage available in terms of 15, 20, 30, and 40 year. Fannie Mae mortgage basics) ii. ARM/Adjustable- Offers a fixed rate initially and later moves on to adjustable rates depending upon the interest rates that the markets experience, after the initial period it may change based on movements in the interest rate index. (Fannie Mae mortgage basics) iii. Balloon – Are offered on a fixed-rate basis for a short-term, typically anywhere from 7-10 years and at the end of the term the full amount must be paid in full in one lump sum. Home Loans 101) iv. Interest only- Allows the borrower to pay only the interest on the mortgage in monthly payments for the initial 5-7 years, but then payments increase as you start to then pay interest and principal over the remainder of the fixed loan term. e. Non Conforming/Jumbo- Are larger than the maximum eligible for purchase by the two Federal agencies, Fannie Mae and Freddie Mac, or could be non-conforming for other reasons that make the loan not salable to the two largest federal agencies. f.
Home Equity Loans- Allows you to borrower or draw funds from the equity that’s in the home or a property, this come in the form of fixed rate or adjustable rate. (Home Equity basics) (Now that you know a little about Conventional Mortgages I am going to talk about Government Mortgages. ) III. Government Mortgages- Are guaranteed and insured loans that are targeting a specific group of people who are looking for home financing, these loans rely on the government for sponsorship. (Home Loans 101) g. Guaranteed Rural Housing Mortgages (USDA loan)-Are guaranteed by USDA’s Rural Housing service (RHS). proximity) (USDA Rural Development-HSF Single Family Housing Guaranteed Loan Program) h. Veterans Affairs (VA) – Are offered specifically to government employees, service men and woman by the US department of Veteran Affairs. (Home Loans 101) i. FHA- Option where the lender is insured against loss by the federal housing administration, with the borrower paying the mortgage insurance premium. (proximity) (Home Loans 101) (As you can see there are several different types of mortgages available, which brings me to my conclusion)
CONCLUSION I. Summary a. I have explained what a promissory note is and a mortgage. (Fannie Mae mortgage basics) (Merriam-Webster) b. I have explained about the different types of conventional loans. (Home Loans 101) c. I have explained about the different types of government loans. (Home Loans 101) II. Whether you are looking to buy or refinance a home be sure to choose the type of mortgage loan that best fits your overall financial plan and specific needs as this is probably one of the largest investments you will ever make. Psychological personal impact and Economical personal impact) Bibliography Fannie Mae mortgage basics. (n. d. ). Retrieved March 20, 2013, from Fannie Mae: http://www. knowyouroptions. com/buy/buying-process/qualify-for-a-mortgage/mortgage-basics Federal Housing Finance Agency – Conforming Loan Limit. (n. d. ). Retrieved March 20, 2013, from Federal Housing Finance Agency : http://www. fhfa. gov/Default. aspx? Page=185 Home Equity basics. (n. d. ). Retrieved March 20, 2013, from Bankrate. com: http://www. bankrate. com/finance/home-equity/what-home-equity-debt-is-1. aspx
