Fixed Rate Mortgage
This type of mortgage maintains its original interest rate throughout the entire life of the loan. Fluctuations in market rates over the term of your loan won’t have any impact on the amount of interest you pay because that rate is already "fixed." Fixed Rate Mortgage Loans come in 10-, 15-, 20-, and 30-year terms.
A Fixed Rate Mortgage Loan may be a good choice if you:
- Plan to stay in this home for at least ten years
- Want to increase the amount of loan you can qualify for
- Want the security of knowing what the amount of your mortgage payment will always be
- Don’t expect your income to increase significantly in the coming years
In determining the length of your loan, you may want to consider:
- The total amount of interest you want to pay over the life of your loan; the total cost of a 30-year loan is higher than the total cost of a 10-, 15-, or 20-year loan. You are trading lower monthly payments for a greater number of monthly payments. (It takes about 22.5 years to pay off half the principal for a 30-year loan.)
- Your ability to make high monthly payments; if you can afford to pay more per month, you reduce the number of months you have to pay. Choosing a 15-year term will save you thousands in interest charges over a 30-year mortgage.
- Another option to shorten loan time and decrease the amount of interest you pay is to get a 30-year loan, so you don’t lock yourself into higher monthly payments, but pay "extra" each month towards the principal.
Adjustable Rate Mortgage
Many buyers who have found their dream home are looking for lower monthly payments to start with, but expect their income to increase over the next few years. When that's the case, an Adjustable Rate Mortgage (ARM) may be a good choice for you.
An ARM is a good choice if you:
- Want to maximize your buying power
- Plan to move in the next 10 years
- Plan to pay off your mortgage within 10 years
- Expect your income to increase over the coming years
- Need or want lower payments at the beginning of the loan
The Rates Are Lower – Way Lower
Because ARMs are subject to rate adjustments later on, the initial interest rate is set lower than standard fixed rates. This rate provides you with initial lower payments or increased purchasing power.
ARMs Have Changed
In addition to standard programs that adjust annually, our programs provide an initial fixed rate from three to ten years before the rate adjusts at all. These options are best for those who want added payment stability and lower monthly expense.
First time homebuyers no longer tend to stay in their "starter" home for 30 years and experienced homeowners often plan to pay off their mortgage long before the 30-year maturity date. Both of these types of buyers may benefit from choosing an ARM product with an initial fixed rate period that corresponds with the amount of time their loan is expected to be outstanding.'
You can always contact one of our friendly, knowledgeable Mortgage Originators to find out more. They will help you find the right mortgage for you.