There are many loan programs available - too numerous to cover them all, we've highlighted the programs more commonly offered today. Characteristics of each loan program are unique, so consult your mortgage professional for more information and to become familiar with the details of the programs available to you.
|15- and 30-Year Fixed-Rate Mortgages
- Interest rate does not change.
- Principal and interest (P & I) does not change.
- Fixed-rate mortgages fully amortize over a defined period of time and are paid in-full at the end of the loan term.
- Different loan terms are available (15- and 30-year terms are most popular).
- The shorter the term, the faster equity is built and the loan is paid off.
- P & I payment and interest rate do not change.
- Regular monthly P & I payments are based on 30-year amortization, while the unpaid balance (balloon) is due at the end of a shorter, predetermined term, typically 5, 7 or 10 years.
- Interest rate is typically less than fixed-rate loans.
- Most borrowers anticipate refinancing or selling prior to the end of the balloon term.
|Fixed-Rate with Temporary Buydown
- Borrowers or the seller may pay to temporarily "buy down," or lower, the interest rate.
- Decreased interest rate reduces the monthly payment.
- Lower interest rate may help borrowers qualify more easily; qualifying factors may vary.
- Interest rate/payment is typically reduced for 1, 2 or 3 years
- There are no reductions to the principal amount.
- There is no provision for negative amortization.
- Payments may increase up to an amortized amount, but the loan balance itself does not increase.
- Generally, interest-only payments are limited to the first 5, 10 or 15 years of the loan.
- After that, the loan is amortized for the remainder of its term
|Adjustable-Rate Mortgages (ARMs)
- There is potential for the interest rate/ payment to fluctuate.
- ARMs transfer to borrowers a portion of the risk associated with a changing economy.
- In exchange for sharing the risk, ARMs offer borrowers initial interest rates that are substantially lower than fixed-rate mortgages.
- The lower interest rate may help borrowers qualify more easily; qualifying factors may vary.