Whether you are in the market for your first home purchase or you are planning on refinancing your current home, knowing the ins and outs of the various mortgage loan program options can help you to make the best possible decision.
For the vast majority of all home purchases there are two different options for a mortgage loan program, then for some purchasers an additional three programs may come into consideration. The different loan programs all have different benefits and also have specific considerations that need to be addressed before you decide which option is best.
Fixed-Rate Mortgage Loan Program
For most buyers the fixed-rate mortgage loan program is the most easily understood since it is designed to give you one consistent payment over the term of the loan. This will typically be 15 or 30 years. With the 15 year option you build up equity in the home faster but the payments are higher per month. At the end of the loan term the mortgage is fully paid off and the property is yours free and clear.
With this type of mortgage loan program, usually referred to as an ARM, your payment per month will vary with the standard financial rates which are based on the overall economy. Lenders often provide you with a lower initial interest rate than you find with a fixed-rate, but you also have more risk should the economy take a turn for the worse and interest rates increase. However, over the long term of 15 to 30 years these adjustments in the interest rate tend to be very minor and may lead to a lower overall principal and interest rate.
In addition to these standard options you may want to consider a fixed-rate balloon loan, which gives you a lower principal and interest payment per month with lump sum or balloon payments due at specific times in the loan. There is also the option to buy down the interest rate temporarily on a fixed-rate loan, which makes qualifying for the mortgage loan program easier for some people.
Finally there is a mortgage loan program known as an interest-only mortgage. Your payments for a set duration of the loan only cover the interest, lowering your monthly payment. At the end of the interest-only time the loan becomes a standard amortized loan.
We provide a range of different mortgage loan program options to meet your needs. Visit us online at for more information.
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