One of the first choices a homebuyer will need to make is whether you want a fixed-rate or an adjustable-rate mortgage loan. The bulk of loans will fit into one of these two categories, however, there is a third option that will allow you to “hybrid” the two.
An adjustable-rate mortgage, (ARM): The interest rate of the mortgage adjusts periodically based on market conditions. For example, your payment will go up if rates go up and go down if rates go down. Fixed-rate Mortgage: Unlike an adjustable-rate mortgage the interest rate is set at the time you take out the loan and will not change. Fixed-rate home loans can be 10 years, 15 years, 20 years or 30 years fixed. 30-year fixed is the most common because it allows your mortgage payment to be the lowest. We are now offering pick a term loans which can be amortized over any year, like 27 years. Hybrid ARM: Features an initial fixed interest rate for a certain amount of time and then becomes an adjustable-rate for the remainder of the term. Standard terms are 3, 5, 7, or 10 yrs.
Let us help you decide what option is best for you. There are a lot of factors to consider when choosing the right program and term for you. You already may know that your plan is to sell within 5 years, you may have plans to refinance again in three years to pull out some equity or want to have the loan paid down faster. Everyone is different so let us provide you with the information so that you can make a solid decision for your financial future.