Loans Types

A fixed rate mortgage is the go to for nearly all homebuyers and refinancers. There is good reason for its popularity. The interest rate and monthly payments will remain the same throughout the lifetime of the loan. This is appealing for buyers looking for stability.

30-year fixed rate mortgages lock in your interest rate and monthly payment for all 30 years. The 15-year is conceptually the same but calls for payment length in half the time, so the monthly payment will be higher. Another perk, you save some serious cash in saved interest over the lifetime of the loan.

An adjustable rate mortgage has an interest rate that can increase or decrease. This can be helpful for a buyer borrowing during a period of low interest rates. ARM rates are tied to the interest rate of Treasury bills.

The main draw is that an introductory ARM interest rate is typically lower than a fixed rate, allowing borrowers to buy more house than they could with a fixed rate mortgage.

For example, a 3/3 ARM loan has a fixed rate for 3 years followed by an adjustment every 3 years. The adjustments are capped at 5% and there is a 3% margin meaning the rate is 3% higher than the current Treasure bill rate.

The amount you put down on your new home has a big impact. It affects your interest rate, monthly payment, and even what loan programs you’re eligible for. Down payments range from as little as 5% to more than 20%, with most lenders ideally looking for 10-20%.