Loan Options
Fixed-Rate Mortgage
The interest rate will remain the same for the entire term of the loan, which can be 10 to 30 years, so the interest and principal portions of your monthly payment remain the same. Your monthly payments remain stable; however initial interest rates tend to be higher on a fixed-rate mortgage versus an adjustable-rate loan.
Adjustable-Rate Mortgage
The interest on an adjustable-rate mortgage (ARM) will change over the term of the loan, which is typically 25 to 30 years. If you select this type of mortgage, you will be told what the "adjustment period" is, which indicates the length of time between interest rate changes on an ARM (i.e. one-year ARM). Commonly, an ARM will have a "cap" on the interest rate increase to limit how much an interest rate or monthly payment can change at each adjustment period and over the life of the loan.
Temporary Buy Down
A buy down is used to reduce the interest rate of your mortgage over the short-term, which results in the buyer paying a lower monthly payment during the initial years of the loan period. The purpose of this type of program is to offer assistance to buyers that anticipate increasing their buying power in the near future, because the buy down keeps the monthly payment more affordable during the early years of the loan.
Balloon Mortgage
In comparison to traditional 15 to 30 year mortgages, a balloon mortgage requires that the buyer make payments over a shorter period of time, usually seven years, and then repay the loan in full at the end of the loan period. This type of mortgage commonly offers a lower interest rate and is appealing to a buyer that does not intend to remain in their home for an extended period of time.
FHA Mortgage
Federal Housing Administration (FHA) guarantees these loans, which offer several benefits to assist buyers in effectively qualifying to purchase a home, such as lower down payment requirements. As a result, this type of mortgage is popular among first-time homebuyers.
VA Mortgage
Department of Veteran's Affairs guarantees these loans for those that are eligible due to military service or other entitlements. These loans offer unique benefits such as zero down payment programs.
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