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In California, a home is financed with a loan secured by a deed of trust, commonly referred to as a mortgage.

Conventional Insured Mortgages are the most common type of mortgage. With low down payments, they are usually insured by private mortgage insurance companies. This insurance adds a small cost to your financing (about 6/10 of one percent of the loan amount per year) but allows you to buy a house with a lower down payment.

FHA Insured Mortgages The Federal Housing Administration, a government agency created in 1934, insures the lender not you against loss. An FHA-insured loan allows you to buy a home with a low down payment, ranging from 3% to 5%. The buyer pays a one-time fee of approximately 3.8% of the loan amount for the mortgage insurance premium at closing. This premium and certain closing costs may be financed as part of the loan. There may be an additional annual fee for low down payment loans. This generally involves a lower down payment and interest rates. You may pay a substantial one time fee called points. Each point is equal to 1 percent of the loan amount.

VA Insured Mortgages are for those currently in the United States military, or have ever served in the U. S. Armed forces. This loan is insured by the Veteran's Administration. Ask your local VA office for details.

Fully Amortized Loan repays the principal (amount borrowed) and the interest over a specified period of time. Initially most of the payment is for interest. Over time the amount towards principal increases. Versus a Not Fully Amortized Loan the monthly payment is not enough to pay off the loan over a specified term. In some cases, the final payment often called a balloon can be greater than or equal to the original amount borrowed.

Fixed Rate Loans or conventional fixed rate loans the interest rate and monthly payment remain the same for the term of the loan.

Graduate Payment Mortgage (GPMs) the interest rate on the loan remains constant throughout the life of the loan. Monthly principal and interest payments do not.

Adjustable Rate Loans the lender can increase or decrease the interest rate on these loans at specified intervals. Monthly payments of principal and interest can increase or decrease at specified intervals.

Comparing Loans

Factors to consider when comparing loans are: Loan terms, Down payment required, Loan fees, Interest rate - lender required to tell you the annual percentage rate (APR). This is the cost of the loan per year including interest and additional finance charges, such as loan origination and certain closing fees. The APR expresses these charges as a percentage. repayment period, Prepayment Penalties, Other financing allowed, Assumptions, Buy Downs and Equity Sharing.