A variety of mortgage options exists, however, they all fall into one of two categories: Fixed Rate Mortgages or Adjustable Rate Mortgages. Learn about each type of mortgage below. Want more information about specific type of mortgage? Contact Us today or browse our extensive mortgage glossary for more information.
A fixed-rate mortgage has a constant interest rate and monthly payments that never change. This may be a good choice if you plan to stay in your home for seven years or longer. If you plan to move within seven years, then adjustable-rate loans are usually cheaper. As a rule of thumb, it may be harder to qualify for fixed-rate loans than for adjustable rate loans. When interest rates are low, fixed-rate loans are generally not that much more expensive than adjustable-rate mortgages and may be a better deal in the long run, because you can lock in the rate for the life of your loan.
Fixed Rate Mortgages are available in the following loan terms:
These increasingly popular ARMS—also called 3/1, 5/1, 7/1 or 10/1—can offer the best of both worlds: lower interest rates (like ARMs) and a fixed payment for a longer period of time than most adjustable rate loans. For example, a "5/1 loan" has a fixed monthly payment and interest for the first five years and then turns into a traditional adjustable-rate loan, based on then-current rates for the remaining 25 years. It's a good choice for people who expect to move (or refinance) before or shortly after the adjustment occurs.
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