At Lenderful, we want you to be in control when getting an online mortgage so it’s important to understand the mortgage options available to you.
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.
Adjustable rate (ARM)
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%.
The Learning Center is an educational tool and the content is for information purposes only and is not intended to provide investment, legal, tax, or accounting advice, nor is it intended to indicate the availability or applicability of any Apple Creek Banking Company product or service to your unique circumstances. All examples are hypothetical and for illustrative purposes. Although we have obtained content from sources deemed to be reliable, Apple Creek Banking Company and its affiliates are not responsible for any content provided by unaffiliated third parties. You may wish to consult an appropriate advisor about your unique situation. The applicability of this information to your circumstances is not guaranteed. You should obtain personal advice from qualified professionals.