Conventional Loans
Fixed Rate Mortgage
Knowing what you can count on
As the most popular program for homeowners, a fixed rate provides peace of mind as your payment remains the same over the life of the loan. The interest rate is locked in during your application phase and does not fluctuate with the markets. (Please note that your property taxes and homeowner’s insurance may change.)
This also provides you an opportunity to really plan your finances on a long term basis, knowing that the mortgage will be consistent. If you decide to pay your loan off early, no problem! There is not a prepayment penalty.
You have options! With fixed rate terms from 30 years down to 10 years, selecting the term for your loan will also provide you with a strategy to suit your financial goals. Some choose a lower term, shortening the payoff time and taking advantage of a slightly lower interest rate. Where this will increase the payment, if your goal is paying off your home early, this is a good option to review.
30 Year Fixed*
- The most popular mortgage loan program.
- A lower loan payment because the loan is paid over 30 years.
- Equity builds slowly and consistently, and you are welcome to pay down your loan at any time.
15 Year Fixed**
- Interest rates are typically lower than 30-year fixed.
- A fixed rate loan that allows you to pay the loan off in ½ the time of a 30 year fixed.
- Pay higher monthly payments in order to pay less in total interest over life of loan.
Adjustable Rate Mortgage
A flexible loan to power short term goals
An Adjustable Rate Mortgage (ARM), is a flexible program option. This mortgage offers a lower fixed rate for a short period of time during the beginning of the loan, usually between 5 and 10 years. Once this period is complete, it begins an adjustable period which follows an index on the market, breathing up and down with the index it is attached to.
The initial fixed rate period offers slightly lower rates than the fixed rate programs, and is a good option if you know the time you will have the home or the loan will be less than the fixed term you select. This can save you money in the short term.
What if you don’t refinance or sell your home within the fixed rate term? When an ARM adjusts, the interest rates may be higher or lower than they are when you first get the loan, and the risk is that it may be higher. If your ARM does adjust up, a Cap will limit the amount that the loan can go up annually and over its lifetime. You will be able to anticipate a worst-case scenario and know exactly how far up your interest rate can change that year and beyond. Keep in mind that, while the initial fixed period of an ARM benefits the borrower, the adjustable period benefits the lender.
Some things to know about an ARM
- Lower interest rates and payments early in the life of the loan.
- Mortgage payments and interest rates remain fixed for introductory period.
- During the adjustable period, there are caps or limits on the amount your interest rate can rise both annually and over the life of the loan.
Does this benefit your short term goal?
- Save money each month with lower mortgage rates/ payment.
- Possibly qualify for a higher loan amount and afford more home.
- Pay off your principal balance faster by making additional payments each month.
Let’s take some time to review this together. I want to be sure you feel confident with this program and whether or not it is a good choice for you. Contact us today for a free consultation.
Rhonda is an extremely professional and efficient agent, very pleasant and easy to business with. She communicates very efficiently so you are aware of the status of your project at all times.