In an ever-changing scenario of real estate and fluctuating prices, North Star Mortgage & Realty have tuned into a quality module. As a wholesale brokerage located in San Jose, California, the company offers an array of low cost mortgage and real estate services. Founded in 1993, North Star Mortgage & Realty have mapped their presence in California by helping thousands of people in refinance with no points and no fees to lower their monthly payments.

With knowledgeable and skilled professionals in the field of real estate, North Star Mortgage has structured a matrix of services with the best possible range of programs. As a reliable and trusted name in mortgage and real estate services, the company has distinguished and unique features in its refinance programs that help you to save money. Offering custom solutions for every mortgage-financing situation, North Star Mortgage ensures that they have tailor-made proposals to ease the burden of selling and financing a home or any other property.

Infusing personal and cost effective real estate and financing services, North Star Mortgage & Realty has designed a kaleidoscope of services with innovative and versatile features. Offering the opportunity to put financial leverage to work, the company has a vast network of mortgage money available to lend. North Star Mortgage & Realty has focused their sights on helping you to achieve your dream of owning your own home and fulfilling personal goals.

When you are ready to shop for a loan, you can work directly with a lender or with a mortgage broker representing many individual lenders. Direct lenders are lending their own money, have in house programs and make the final decision on your application. Mortgage brokers are intermediaries who represent many lenders and loan programs from which to choose.

If you have special financing needs or want to shop the market for the best deal, an experienced broker may be able to find the best loan for you.

Along with shopping the source, you'll also have to shop the total cost of the loan, including the interest rate, fees, points (each point is one percent of the amount you borrow), prepayment penalties, the loan term, and a host of other items.

Choosing a Loan Program

There isn't a single or simple answer to this question. The right type of mortgage for you depends on many different factors:

1. Your current financial picture
2. How you expect your finances to change
3. How long you intend to keep your house
4. How comfortable you are with your mortgage payment changing

For example, a 15-year fixed rate mortgage can save you many thousands of dollars in interest payments over the life of the loan, but your monthly payments will be higher. An adjustable rate mortgage may get you started with a lower monthly payment than a fixed rate mortgage, but your payments could get higher when the interest rate changes.

The best way to find the "right" answer is to discuss your finances, your plans and financial prospects, and your preferences frankly with a mortgage professional.

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Mortgage loan choices abound

1. 30-year fixed rate
2. One-year adjustable-rate, or ARM
3. Hybrid
4. Interest-only
5. Payment-option loans

Variety in mortgage offerings may ultimately be a boon to borrowers, but, at least at the start of the mortgage-shopping process, variety holds the potential for plenty of confusion. Here's a guide to some of the basics. Always be aware that some lenders, in their desire to offer something the competition doesn't have, may offer loans that mix features in new -- and potentially confusing -- ways.

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Mortgage Rates

30-year fixed rate mortgage

The traditional mortgage remains a favorite of borrowers. Although the interest rate is generally higher than the starting rates on other loan types, your interest rate and payment will remain fixed for 30 years with this type of loan, and that's a boon to planning your long-term finances.

A variety on this is a fixed-rate loan with a term of 15 or 20 years. Required monthly payments on these loans will be significantly higher than on a 30-year fixed, but you will build equity faster and, in the long term, pay much less in interest. Most lenders allow you to prepay principal on a 30-year loan, so you can retire the debt earlier. Some lenders also offer 40-year terms, which lowers the monthly payment, but stretches out your indebtedness significantly and boosts the total amount you will have spent on interest.

One-year adjustable-rate mortgage, or ARM This is the original variety of an adjustable rate mortgage, commonly referred to as an ARM. A one-year ARM has a 30-year term, but your interest rate will adjust every year. The interest rate will be determined by the index that your loan is pegged to, typically one-year Treasury rates or the LIBOR index (an acronym for the London Interbank Offered Rate) or the COFI index (Federal Reserve Cost of Funds Index). LIBOR and COFI indexes also are used frequently for mortgages that adjust their interest rates more frequently than once a year. Hybrid mortgages Sometimes called a "three-year fixed" or a "five-year fixed," these loans incorporate some of the features of fixed- and adjustable-rate loans. For example, a basic "3/27 hybrid" loan will offer you a rate that is fixed for the first three years and then converts to a one-year ARM for the remaining 27 years of the full 30-year term. Interest-only mortgages As the name implies, these loans, usually an ARM or a hybrid, allow a borrower to make interest-only payments during the first five years or so. After that, borrowers are expected to repay principal and interest in order to pay off the loan within the remaining 25 years of its term. Payment-option loans They come by different names, usually incorporating the words option or choice. These loans offer borrowers a choice of two or three payments each month, but their complexity grows right along with those choices.

4 ways to make mortgage payment with option loans

1. Make full payment of principal and interest.
2. Pay more than a full payment.
3. Pay only the interest due for the month.
4. Pay only a portion of the interest.

The first two choices are fairly straightforward: You can pay the full amount of principal and interest owed that month, just as you would with a traditional mortgage, or you can choose to pay even more and pay off a 30-year-loan on a 15-year schedule. However the other two choices can get borrowers in over their heads if they aren't careful. In any given month, a borrower can opt to pay only the interest that is due that month, or the borrower can choose an even smaller minimum payment, an amount that covers none of the principal and only part of the interest that is owed. To make things even more complicated, these loans often have interest rates that adjust as frequently as every month. And payment caps could allow your minimum payment to rise by as much as 7.5 percent in a given year.

Risk factors

If borrowers choose to make the minimum payment frequently, these loans can set the borrower up for a huge payment shock after just a few years. At the end of five years, or whenever the borrower's outstanding loan balance has grown to 10 percent or 15 percent above their original loan amount, the loan will be recast. That means the lender will draw up a new payment schedule designed to get the loan paid off on time, and the minimum payments can grow dramatically. There are no caps on how high the payment can go at these recast periods. Only the most financially sophisticated borrowers (perhaps those few who already understand from personal experience how hedge funds and arbitrage work) should consider these very complicated mortgages.

Sticking points on any type of mortgage

There are two other options that can be added on to almost any loan, and it's worth your time to look for them in the fine print.

Prepayment penalties, which can amount to six months of interest, restrict borrowers from refinancing out of a mortgage within the first few years. Some even apply if you were to sell the home. Avoid them unless the lender is giving you a very deep discount on the interest rate as compensation.

Also check for balloon payments. These can be called for in some ARMs that have easy terms in the early years. If your loan calls for a balloon payment, that is payment of all the money outstanding, at year 10, you'd better have good plans lined up for refinancing that loan -- or a lot of cash on hand.

Find a mortgage type that matches your lifestyle.

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