Mortgages are not one-size-fits-all. SunTrust Mortgage offers several types of mortgage loans that can meet the needs of the borrower, and they take the time to help you decide which loan would best fit your circumstances.
• Fixed Rate Mortgage payments don’t fluctuate with the interest rate, which allows borrowers to budget a consistent amount each month. Payments are smaller, although in the beginning most of the amount goes toward the interest. That means borrowers can deduct more from their taxes, but home equity builds very slowly. In addition, if the interest rate goes down, you must refinance to take advantage of the new rate. An article on Realtor.com pointed out that the amount of interest that accrues over the life of the loan means you are also paying a higher price for the property.
• SunTrust also offers Adjustable Rate Mortgages, or ARMs, in several types. The most common are “hybrid” and “interest only.” The ARM payment fluctuates with the interest rate. Hybrid types allow you to pay a consistent amount for the first five years before the adjustment begins, and interest only plans allow you to pay only the interest amount for the first five years. The interest during this time is lower because you are “betting” that the rates will not go down more. According to Nerd Wallet.com, that means if you plan to only stay in the home for five years before you sell it, you can take advantage of the fixed or interest only period to save money. The downside to these mortgages is that payments rise with the interest rate and there is often a fee or penalty if you do sell within that first five years.
• SunTrust’s Agency-Plus loans are real estate loans over $417,000. People who are buying higher-priced properties can benefit from these loans because they can get all the financing in one place instead of piecing out the amount needed between loans. Still, they carry higher interest rates because the bank is taking a risk with the larger loan.
• Doctor Loans are “no-down-payment” loans that allow physicians to use money that would have gone toward down payments to start clinics or otherwise invest in their practices. Banks understand that doctors may not have been able to save toward a down payment because of student loans and lower salaries while they interned. The downside to these loans is that you have negative equity in your home for much longer than you would have had if you had paid some of the price down in the beginning.
• FHA Loans are easier to get than many other types. SunTrust can offer up to 96.5% financing on some of these mortgages. They carry relatively low down payment requirements and sellers can pay up to six percent of closing costs to assist borrowers. There is no penalty for paying the loan down early, either. The cons of FHA loans are that borrowers are required to carry expensive mortgage insurance and must have established credit to qualify.
• VA Loans are mortgages intended to thank veterans for their service. SunTrust can offer 100% financing on a 1-4 unit primary residence, which means there is no down payment required. They also feature negotiable interest rates and some fees are waived. The major drawback to VA loans is that many sellers don’t fully understand them and may prefer other types of financing. Also, if you elect the 100% financing option, it will take you longer to build equity.
• Construction- through-Permanent loans are mortgages people take out before building a home. It is all-inclusive (you don’t have to take out other loans for different phases), and involves only one closing. That saves on closing costs and allows borrowers to lock in the interest rate that was available when they began the construction. The down side is that if the interest rate plummets you are stuck with the higher amount.
SunTrust offers many different mortgage products for many different types of customers, from doctors to veterans to first-time home buyers. Before you settle on any one lender, however, you should compare mortgage rates to see what’s available.