Mortgage Programs
30-year Fixed Rate
The standard homeowner’s mortgage today is the 30 year fixed rate mortgage. This means that the homebuyer will make the payments for 30 years to pay off the mortgage. Because the interest rate is fixed and does not vary, the mortgage payments will remain the same for the 30 year term of the mortgage loan. The monthly payments on a 30 year mortgage will be lower than the payments on a shorter term loan, but the amount of interest paid on the entire loan will be higher. A 30 year fixed rate loan is best for home buyers who intend to remain in their home for awhile, and wish to take advantage of the lower monthly payments.
15-year Fixed Rate
Another option for the home buyer is the 15 year fixed rate mortgage. This means that the home buyer will make the payments for 15 years to pay off the mortgage. Because the interest rate is fixed and does not vary, the mortgage payments will remain the same for the 15 year term of the mortgage loan. The monthly payments on a 15 year mortgage will be higher than the payments on a 30 year loan, but the amount of interest paid on the entire loan will be lower. A 15 year fixed rate loan is best for home buyers who intend to remain in their home for awhile, and who can afford the higher monthly payments.
30-year Adjustable Rate
A 30 year adjustable rate (ARM) mortgage has a 30 year term over which the loan is paid off, and an interest rate that varies, or adjusts, according to some index of prevailing interest rates. An ARM usually starts with lower interest rates than a fixed rate mortgage, and therefore lower monthly payments, but that interest rate can go up and then the monthly payment will increase. A 30 year ARM may be best for someone who does not plan to live in their house for long, and who wants to take advantage of the lower initial monthly payments.
15-year Adjustable Rate
A 15 year adjustable rate (ARM) mortgage has a 15 year term over which the loan is paid off, and an interest rate that varies, or adjusts, according to some index of prevailing interest rates. An ARM usually starts with lower interest rates than a fixed rate mortgage, and therefore lower monthly payments, but that interest rate can go up and then your monthly payment will increase. A 15 year ARM may be best for someone who does not plan to live in their house for long, and who wants to take advantage of initial monthly payments that are lower than on fixed rate mortgages.
FHA Home Loans
The Federal Housing Administration (FHA) provides mortgage insurance to insure that the full amount of the mortgage loan will be repaid to the lender if the buyer defaults on the payments. Because of this insurance, FHA insured mortgages usually have lower down payment requirements, offer lower interest rates and often have lower closing costs, as well as easier qualification standards. The actual mortgage itself is obtained from a private lender, and the FHA does not make loans itself. The FHA offers both fixed-rate and adjustable rate mortgages, as well as special programs for teachers and law enforcement officers.
