There are so many types of mortgage loans available today, how do I know which one is best for me?
Ever feel like there's a world of financing information that's hidden away? Confused about which loan type is best for you? Personal situations vary, and only a qualified lender can give you full details. But we can help open the door to financing solutions, and to your new home. Here's some info on common mortgage types:
- Fixed monthly payments over the life of the loan.
- Low risk.
- Higher initial interest rates than adjustable loans mean the borrower may pay more interest charges over the life of the loan, depending on whether rates on adjustable mortgages go up or down
- Faster equity buildup than a 30-year mortgage.
- Interest rate often the same or slightly lower than 30-year fixed.
- Monthly payments are higher than a 30-year fixed loan.
Adjustable Rate (ARM)
- Shorter term provides substantial interest savings over 30-year fixed.
- Often a lower interest rate than 30-year loans.
- Monthly payments will be higher than a 30-year fixed loan, making 15-year loans difficult for many first-time buyers.
- Starts out at lowest interest rate, then adjusts every 1, 3, or 5 years. Good for first-time buyers who might not have income to qualify for another loan.
- Depending on market conditions, the loan adjustments can mean increased rates down the road.