Programs

Rock Creek Mortgage Inc. understands that our clients may have special needs. Other mortgage companies don't always address those needs. We have a complete line of products and programs that are right for you and whatever your needs. Our program list is perfect! We can offer you the best price on the perfect loan for you. No shopping around necessary, all you need is right here. Our overall price is the best, we CAN PROMISE YOU THAT!

Mortgage Products Highlight

First Time Homebuyer Home Improvement Funding

Debt Consolidation 125% 2nd Mortgages

Purchase Bad Credit? Minimal Credit?? No Problem!

No Cost & Low Cost Refinances Interest Only Jumbo/Conventional

Home Equity Loans No Qualifying Loans

New Home Loans Non-Prime

100% Loan to Value (LTV) Small Commercial

90% LTV Non-Owner Occupied Home Equity Loans Up To 100%

Low Ratio Loans Adjustable Rate Mortgages (ARM's)

JUMBO Loans Balloon Loans

Low Down Payment Loans Buy-down Loans

For additional information, see below

Choosing the Right Loan Program

Making the Right Decision

It's important to know what all your options are before choosing a loan program for your home purchase or refinance. It's our goal to assist you in making the selection that's right for you.

The most critical decision that a consumer is faced with when applying for a loan and borrowing money, is trying to forecast to the best of their ability how long they will need to borrow the money for.

Once we determine how long the loan life should be, we can then start to look at what type of loan programs are available, as well as whether or not it is appropriate to pay points.

Which loan program is suitable for my scenario?

A critical error often made by a borrowers is that they select a 30 Year Fixed Rate mortgage when that type of loan is not necessary. The most common reason for selecting a 30 Year Fixed loan is that it's the one that is most understandable on paper, and it also provides the most stability. Although there are many good reasons for borrowing on a 30 year fixed rate, remember that there are other types of loan programs that could be of great benefit and still accomplish the same objective.

For example, if a borrower was not expecting to stay in the home for an extended period of time, or if there was an anticipated ability to refinance and obtain lower monthly costs (as a result of a drop in interest rates), a 30 year Fixed Rate loan would not necessarily be the best option for the borrower.

The following are different types of loan programs offered in the marketplace, and an explanation as to why each one would prove to be beneficial for a given scenario.

Fixed Rate Mortgages

The 30 Year Fixed and a 15 Year Fixed are the two most common mortgages that borrowers obtain in the United States today. The main reason for this is because of the stability they provide.

When a borrower chooses a 15- or 30 Year Fixed Rate mortgage loan, they don't need to worry about where their mortgage payment will be five, ten or even fifteen years from now because the payment will absolutely never change. Both of these mortgages, the 15- and the 30 Year, are considered to be fully amortized loans, meaning that they are set on an amortization schedule that results in a zero balance being owed at the end of the given period of time.

A 30 Year Fixed Rate mortgage's shining feature is its stability. However, the down side is that it's accompanied by the highest interest rate available in the marketplace for an "A" Paper credit borrower. The reason for this higher interest rate is the trade off for the stability that it provides.

A 15 Year Fixed Rate mortgage has a slightly lower interest rate than a 30 year, however the payment is substantially higher as a result of an accelerated reduction of principal, hence the reason that it is paid off in fifteen years. Over the course of time, a 15 year fixed rate mortgage, if affordable, is a preferable option. Substantially less money will be paid in interest over the life of that loan, in comparison to a 30 year fixed rate mortgage.

The one drawback to a 15 Year Fixed Rate mortgage is that you are obligated to a much higher monthly payment than on any other type of loan program. So before borrowing and deciding to obtain that type of a loan, be sure that you are comfortable with the fact that your payment will be quite high.

Often times, it is better to pay the slightly higher interest rate on a 30 Year Fixed Rate mortgage and prepay the loan on a 15 year amortization schedule. The reason that this is a benefit to some consumers is if they were to have a cash flow problem on a monthly basis, they could revert back to the 30 year payment. When you are in a 15 year fixed, you do not have that option, you are obligated to the higher payment. Adjustable Rate Mortgages (ARM)

There are three main features that need be understood as it relates to an Adjustable Rate Mortgage, or ARM. The first is the "Margin," the second is the "Index," and the third is "Caps." Please read on for a definition on each feature of this type of mortgage loan.

Margin - The margin is the fixed or constant portion of your ARM; it never changes. It also is the spread above the index that equals the interest rate.
Index - The index is your variance. This is the portion of your ARM that constantly changes. There are several different types of indices in the marketplace. Some provide more stability than others, and are consequently considered to be more attractive ARMs. Some of the most common indices are: The "One Year Treasury Bill", the 6 month LIBOR, the 6 month CD, and the 11th District Cost of Funds. The Prime Rate, which is tied to most consumer credit cards is also an index. It changes on a very infrequent basis.

Cost of Funds is considered by most to be the most stable index in the marketplace.

When you combine the constant fixed margin to the varying index, you have what is known as your interest rate.

One might asked the question, "If my margin is 3% and the index goes up to 10%, does that mean that my rate is 13%?"

The answer to that question would be yes, with the exception of the fact that you have a third item involved in the process, and this is what is known as your Caps.

Caps- The Caps can also be defined as your liability. What is the worst case scenario? How bad or how high can this adjustable go?

An example of where the Caps would come into play would be as follows:

On a One Year Treasury Bill ARM, you might be able to obtain an interest rate of 6%. That rate on the One Year Treasury Bill (because it adjusts once a year) is fixed for the first year at the aforementioned 6%. At the end of one year, the lender will take your fixed margin and add it to the value of the One Year Treasury Bill which is your "Varying Index". This determines your interest rate.

The One Year Treasury Bill mortgage has a 2% annual cap, therefore you as the consumer are protected from your rate going up more than 2% in any given year. So, if the margin and the index added up to more than 8%, your rate would go to only 8% and that's where the Cap would come in and protect you.

The One Year Treasury Bill mortgage often also has a 6% Life Cap, meaning that the maximum that you could ever be on your rate would be 6% above where you started. In this example, with your start rate at 6%, and your life cap at 6%, you could never have an interest rate higher than 12%.

Intermediate Fixed Rates

Intermediate Fixed Rate loans are a combination of both the Fixed Rate and Adjustable Rate types.

There are 3-, 5-, 7- and 10 Year Fixed Rate Loans available in today's market. At the end of the fixed tenure, the loan converts to an Adjustable Rate Mortgage, where it will stay for the remaining term of the amortization schedule. All four of these loan types are amortized for 30 years.

In the case of the 5 Year Fixed, it's fixed for 5 years, and an adjustable for 25 years. The benefit of this type of loan is that it provides the consumer with a much more attractive interest rate than the 30 and 15 year fixed. If the borrower is not going to need the money for longer than the five year period; then it would be in their best interest to take out a 5 year fixed rate loan.

Once again, the mistake is often made by the consumer when they take a 30 Year Fixed Rate mortgage, and the probability of them being in that loan for more than 7 years is very slim. In that particular case, it would be in the borrower's best interest to take a long look at a 7 Year Fixed Rate mortgage with a more attractive interest rate. This would allow them to save money in the long run. In conclusion, remember that it is very important that before you make your loan decision, try to the best of your ability to understand the following factors:

How long do I think I will live in this home?
Where are rates presently, and what are they anticipated to be in the future?

To elaborate on that a little further, when rates are at historical lows, the probability of rates ever being better down the road is slim. When rates are inflated, and higher than their historical lows, we can then therefore make a assumption (due to the cyclical nature of rates) that there are brighter days ahead.