Types of Mortgages
When you compare competitive mortgage offers, knowing the different types of mortgages available will help you make your decision. Here are explanations of the basic types of mortgages.
Fixed-Rate Mortgages
The most popular competitive mortgage offers are usually for fixed-rate mortgages because of the low risk involved. Fixed-rate mortgages come with interest rates and monthly payments that remain the same for the life of the loan. Most commonly, fixed-rate mortgages are amortized over a 30-year term, but we also offer competitive mortgage offers on 15- or 20-year terms. Smaller terms allow you to build equity in your home faster and usually come with lower interest rates. Conversely, you might also opt for a 40-year term, which will give you the lowest possible monthly payment but the highest interest expense overall. You should look into competitive mortgage offers on a fixed-rate loan if:
- You plan to stay in your home for at least five years
- Interest rates are on the rise
- You want the security of consistent monthly payments and interest rates
Adjustable-Rate Mortgages
We can also provide competitive mortgage offers on adjustable-rate mortgages (ARMs), which have fluctuating interest rates that result in vacillating monthly payments. Your interest rate will change, or "adjust," according to your mortgage's adjustment period. This period usually occurs every one, three, or five years. Initially, an ARM will have a lower interest rate than a fixed-rate mortgage. The initial rate on an ARM is typically fixed and will last anywhere from one to ten years. If you have an ARM and interest rates remain constant or decline in the future, an ARM can give you more competitive mortgage offers than a fixed-rate mortgage. You might consider competitive mortgage offers on an ARM if:
- You plan to move in the next five years
- You think interest rates are on the decline
- You would like the lowest interest rate possible and can tolerate the accompanying risk
Hybrid Mortgages
Hybrid mortgages combine some of the best features of fixed-rate and adjustable-rate mortgages. We can give you quotes on competitive mortgage offers for hybrid mortgages that begin with a fixed initial payment that later converts to an ARM. Hybrid mortgages are usually referred to as 5/1, 3/1, etc. The first number indicates the length of the fixed term; the second number represents the adjustment interval after the fixed term. For example, on a 5/1 hybrid, your interest rate would be fixed for five years, after which the rate and payments would adjust every year. If you have any questions, please check out our FAQ page.
