According to the Mortgage Bankers Association in 2003, the US mortgage industry churned out $3.8 trillion (that is 3,800 billion dollars of mortgages). This spawned unprecedented competition and mortgage product innovation and created mortgage options that did not exist several years ago. Each type of mortgage has its pros and cons and the best one is the one that best suits your needs.

The type of mortgage you choose is dependent on the combination of your goals and reality. That is why we listen carefully to your goals and needs before explaining the relative merits of the most appropriate mortgage types for you. After that we shop the best deal for you based on your mortgage choice, FICO score, income and cash reserves (if any). The best deal for you today may not be the best deal for you tomorrow since the requirements of mortgage lenders frequently change. We literally have over 100 mortgage products to offer you and each one of those mortgages has its ideal application. Here are a few popular loans and the features and applications for each.

30-year fixed-rate mortgage: This is the mortgage that your parents had. Your monthly rate is locked in for the life of the mortgage regardless of where rates go. In the era of your parents it made a lot of sense - most of the time it no longer does. As the quotes from the highlighted speech given by Federal Reserve Chairman Alan Greenspan to the Presidents of America's credit unions on this website thousands of dollars in extra payment are given by the mortgage holder to the bank.

Fact is, in your parents era they lived in the same home for 20 or so years and middle class Americans had almost no options to put their money to work. In 2006-2007, the average Californian lives in their house for less than 4 years before moving and there is a vast array of choices to put your money to work for an above average return. When they sell they pay off their mortgage and in the first 5 years of a 30 year mortgage less than 8 percent goes to principal, the rest is interest for the bank's benefit. They will reinvest that money for their benefit and not yours. Watch Smarter Mortgage Systems to learn the disadvantages of a fixed mortgage.

3/1 Hybrid ARM: Combining features of a fixed loan and an adjustable-rate mortgage (or ARM). Monthly payments are set for three years, then the loans interest rates change. The benefits are that payments for the first 3 years are lower than a 30 year fixed loan, plus you initially get the comfort of knowing your monthly payment is fixed. Risks: When the fixed period ends your payment can jump.

40-year fixed-rate loans: Like the standard 30-year ARM mortgage with the advantage of a 22% to 30% lower monthly payment over a 30 year ARM and up to 50% lower monthly payment compared to a 30 year fixed mortgage. See the page Smarter Mortgage System to learn why if you put the cash flow savings to work you are much better off with a 40 year mortgage. Most consumers mistakenly make assumptions about a 40 year mortgage that are self defeating. In fact, for most California consumers they are better off with a 40 year mortgage for reasons addressed in our DVD Smarter Mortgage Systems.  The 15 minute learning process that addresses how a 40 year mortgage could be better for you also underscores why we are a much better mortgage broker to work with. We do not just quote you a better rate. We are passionate about educating you so you can get to that position where you can make a more informed decision.

Adjustable-rate loans: Some ARMs dangle introductory interest rates as low as 1 percent and they go up each year at a predictable rate. These are great when you know you are going to live in a home for 5 years or less. 

Hybrid ARMs: They start out like fixed-rate loans, charging the same flat monthly payment of principal and interest. After three to seven years, typically, they turn into adjustable-rate loans. The payment shock can be substantial if interest rates rise dramatically. We offer Hybrid ARMs where the interest rate increases are capped.

Interest-only loans: Borrowers may pay only the interest portion of the monthly payment, typically for three to five years but sometimes up to 10 years. After that, the monthly payments can vault higher to pay off the principal over the remainder of the loan.

Option ARMs: Every month borrowers get to choose from a handful of payment options.  When times are good, the mortgage holder can pay what they would owe under a standard 15-or 30-year fixed-rate mortgage. Or, they can just pay the interest, and when cash is tight they can make a minimum payment that is less than the interest charge. This gives someone maximum payment flexibility if they are employed in a riskier industry where downsizing could be an issue. See the Common Questions page to learn a lot more about these popular Option ARMS.  Traditionally, these loans were marketed to the financially savvy millionaires that wanted to put their money to work for their benefit and not the banks benefit.

“Piggyback” loans: This is an increasingly popular loan type that involves packaging two loans to avoid the hefty monthly bills for private mortgage insurance, or PMI, that is required when borrowers make a down payment of less than 20 percent. For example, lenders often package one mortgage for 80 percent of the homes value with a home-equity loan or line of credit for the remaining 20 percent. 

Stated-income loans: Lenders can issue “low doc” or “no doc" loans that waive some of the required documentation lenders typically require such as bank statements and other documentation to substantiate their income and other assets on their applications