What is a two-step mortgage?
Good news. A two-step loan helps a buyer really dance! Although the traditional 30-year mortgage is still the most widely-used home financing, a relatively new variation on the theme is gaining popularity:
- The two-step mortgage amortizes the loan over 30 years, but generally starts out at a lower rate than a typical 30-year loan.
- The rate is lower because after the initial period, the interest rate is adjusted to the prevailing rate for the balance of the loan.
- The initial step is pre-set for a specific period, say 3 to 10 years, and the second step is the remaining time, generally 20 to 27 years.
- The lower initial rate makes the two-step loan popular with first-time buyers because monthly payments are lower, but it also helps homeowners buy up to their next home.
With our experience, we can give you tips that will help you through the mortgage maze phase of home buying. Call or e-mail us for information specific to your needs.