Loan Descriptions
Below, you will see a brief description of some loan types offered. Some of them are not used as much as others.

If you have any questions, contact us at 800-942-5394 or send a fax to 800-348-0482 . You can email us at info@allstatebanc.com .

Conforming Loan
A loan in which the amount borrowed is less than or equal to $417,000 (this number could be different depending on the bank)

Jumbo Loan
A loan in which the amount borrowed is greater than $417,000 (this number could be different depending on the bank)

30 Year Fixed Rate Loan
This type of loan has 360 monthly payments that remain the same for the entire 30 year period after which time the loan is paid in full. The monthly payment is based on an interest rate which does not change over the term of the loan (hence the term "fixed rate").

20 Year Fixed Rate Loan
This type of loan is the same as the 30 year fixed rate loan except the life of the loan is 240 months as opposed to 360 months. Since the loan is being paid slightly faster than the 30 year fixed rate loan, monthly payments for this type loan are higher than the 30 year fixed rate loan. Some Lenders allow for a lessor rate.

15 Year Fixed Rate Loan
This type of loan is the same as the 30 year fixed rate loan except the life of the loan is 180 months as opposed to 360 months. Since the loan is being paid faster than either the 30 year fixed rate loan or the 20 year fixed rate loan, monthly payments for this type loan are higher than the other two loans.
Generally, the longer a lender agrees to keep the interest rate "fixed", the greater the risk to the lender, therefore, in most instances, interest rates on 15 year fixed rate loans are slightly lower than on 20 or 30 year fixed rate loans.


Interest Only 10/1 ARM
This is an adjustable rate interest only mortgage with the interest rate constant for 10 years and then adjusted every year thereafter. The first 120 payments will be based on the interest rate and loan balance. Payments will be calculated to pay only the accruing monthly interest at the Initial Interest Rate. Starting with the 121th payment, the monthly loan payment will consist of principal and interest and will fully amortize over the remaining 20 years. Available for both conforming and non-conforming loan amounts with an index of the average of InterBank offered rates for one-year U.S. dollar-denominated deposits in the London market ("LIBOR"), as published in The Wall Street Journal. The interest rate cannot increase or decrease by more than 5% on the first interest rate adjustment date. Commencing with the second interest rate adjustment date, the interest rate cannot increase or decrease by more than 2% from the interest rate in effect immediately prior to the interest rate adjustment date. There is a life of loan interest rate ceiling equal to the sum of the initial interest rate plus 5%. The floor is the margin.

Interest Only 30-Year Fixed
A fixed-rate interest only mortgage with the interest rate constant for 360 months. The first 180 payments will be based on the interest rate and loan balance. Payments will be calculated to pay only the accruing monthly interest. Starting with the 181st payment, the monthly loan payment will consist of principal and interest and will fully amortize over the remaining 15 years.


Government Loan
This type of loan is guaranteed by a federal agency such as the Veterans Administration or the Federal Housing Administration or by a State agency such as a State housing authority. Such loans, however, contain income, purchase price or other eligibility requirements.


Construction Loan
This type of loan is used to finance the construction of a home. It may or may not also include the purchase of the land upon which the home is to be built. Unlike a mortgage loan where the entire amount of the loan is disbursed to the borrower at the time the loan transaction is consummated, a construction loan involves a series of disbursements which are linked to a construction schedule. Some construction loans have fixed interest rates, others have variable interest rates. In addition, some construction loans automatically convert to a regular mortgage (referred to as "permanent" financing) once construction has been completed, while others require another loan transaction to take place so the borrower can payoff the construction loan and obtain permanent financing.


Bridge Loan
This type of loan is offered by lenders to borrowers who plan to use money from the sale of their current property to purchase their new property but are moving into the new property before the sale of their current property takes place. In such instances, a bridge loan is obtained, (based on and secured by the borrower's equity in their current property), to "bridge" the time between when the borrower buys their new property and the time when the borrower sells their current property At the time of the sale of the current property, the proceeds from such sale are used to pay off the bridge loan. Typically, bridge loans are for a short period of time (e.g. 3 - 6 months) and feature adjustable interest rates tied to an index such as the prime interest rate.


Land Loan
While the typical mortgage loan involves both a structure and the land upon which the structure is built, this type of loan involves only land on which a structure has yet to be built. In doing a Land Loan, if converted to a Construction-Permanent Loan within 1 year, this will sometimes allow for a credit back to the customer for his/her new loan.


3/1 Adjustable Rate Mortgage (ARM)
This type of loan has monthly payments that are based on a 30 year repayment schedule and the interest rate remains fixed for the first 36 months (three years). After that time the interest rate (and, therefore, the monthly payments) may change every 12 months (one year). This is referred to as the "adjustment period". The new rate is based upon fluctuations in an index (typically the One Year Treasury Security) and is calculated by adding a specified amount to the index. The amount that is added to the index is called the "margin" (typically 2.50% - 3.00%). For example, if the index equals 5.0% at the time of adjustment and the margin equals 2.75%, the new interest rate would be 7.75%. However, this type of loan program usually has limits on how much the interest rate can change (either up or down) at each adjustment date, compared with the interest rate being charged before the new adjustment is made. Typically, this limit is 2% and is referred to as an "adjustment cap". There is also a limit as to how much the interest rate can change (either up or down) from the initial interest rate over the entire life of the loan (typically 6%) and this is referred to as a "lifetime cap". The monthly payment changes, as needed, at each adjustment period, to reflect the adjusted rate.


5/1 Adjustable Rate Mortgage (ARM )
This type of loan is similar to the 3/1 ARM except for the fact that the interest rate remains fixed for the first 60 months (five years) as opposed to the first 36 months. After that time the interest rate (and, therefore, the monthly payments) may change every 12 months (one year). As with a 3/1 ARM, the index is typically the One Year Treasury Security index, the margin is typically 2.50% - 3.00%, the adjustment cap is typically 2% and the lifetime cap is typically 6%.


7/1 Adjustable Rate Mortgage (ARM)
This type of loan is similar to the 3/1 ARM except for the fact that the interest rate remains fixed for the first 84 months (seven years) as opposed to the first 36 months. After that time the interest rate (and, therefore, the monthly payments) may change every 12 months (one year). As with a 3/1 ARM and a 5/1 ARM, the index is typically the One Year Treasury Security index, the margin is typically 2.50% - 3.00%, the adjustment cap is typically 2% and the lifetime cap is typically 6%.

If you have any questions, contact Allstate Bancorp, Inc. by calling 800-942-5394 or sending a fax to 800-348-0482 . You can email us at info@allstatebanc.com.