Types of Loans |
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30-year fixed
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30-year fixed-rate mortgages provide stable rates and
payments for the life of the loan. This means that
your payments will not change for the 30 years you
have the loan. This is a good loan option to consider
when mortgage rates are historically low - you can secure
a low rate for the full life of the loan. You should
consider this type of loan if you want rate and payment
stability, want to take advantage of current low rates,
and are planning on staying in your house for a long time. |
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15-year fixed
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Like a 30-year fixed rate loan, 15-year fixed-rate mortgages
provide stable rates and monthly payments for the life of
the loan. With the 15-year loan, you build equity faster.
The shorter loan term results in higher monthly payments,
but it also means that you end up paying less interest - saving
you money in the long run. You should consider this type of
loan if can afford to pay a little more each month and are
attracted to the idea of saving money overall and getting
your loan paid off in half the time - if you are close to
retirement, for example. |
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5-year ARM
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With the 5-year Adjustable-Rate Mortgage (ARM), the rate and
payments are fixed for the first five years of the loan, and
then they are adjusted once or twice each year after that
(to more closely match the current market rates at that time).
One advantage of this type of loan is that the initial interest
rate is usually lower than you can get for a 30 or 15-year fixed
rate loan - meaning that your payments may be lower for the first
5 years of the loan. After that, however, the rate and payments
will adjust to prevailing market rates. This loan is a good option
for people who want a low initial rate, and who may move to a
new property or refinance their mortgage before the initial
5-year fixed period is over. |
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3-year ARM
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The 3-year ARM provides rate and payment stability for the first
three years of the loan. After that, your rate and monthly payment
may change every year for the remaining life of the loan. Because
the initial rate is usually lower that that offered for 15 or 30-year
fixed rate loans or 5 year ARMS, this loan could be a good option
if you plan to sell your home or refinance within a few years - you
could get a bargain rate for the first three years. |
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 Frequently Asked Questions
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* Not to be construed as a loan application or a commitment to lend. Rates are subject to change at any time and without advance notice.
