MORTGAGE-WORLD.com is a full service online mortgage broker specializing in FHA, VA, Jumbo, Conventional, cash outs, streamlines and IRRRLs.
Do you want to lower your monthly payment or take cash out? Maybe you need to update ownership? Let one of our mortgage professionals discuss the product that’s best for you.
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Types of Loans
30 Year Fixed Rate Mortgage
A 30 year fixed mortgage is possibly the most common type of mortgage loan. It has several characteristics that make it such a popular choice when financing a home purchase. One of the key features of a 30 year fixed mortgage is its fixed interest rate. If you are able to lock a great interest rate when getting the mortgage, you are set. That is the rate for the next 30 years, assuming that you own the house that long. Another attractive characteristic of a 30 year fixed mortgage is its relatively low monthly payment. Since repayment of the loan is stretched out over 30 years, that keeps the monthly payment from getting too high.
15-Year Fixed Rate Mortgage
A 15 Year Fixed Rate Mortgage is a loan with the same interest rate and monthly payment over the 15 year life of the loan. You generally pay a lower interest rate, pay less interest over the life of the loan, and build equity more quickly with a 15 year loan than with a loan carrying a longer term. A 15 year fixed rate mortgage allows you to build equity relatively quickly. With this type of mortgage, the term of the loan is only a 15 years instead of the more typical 30 years. The monthly payments are higher with a 15 year mortgage than a 30 year mortgage, but a 15 year loan can provide many advantages if you can afford it. A fixed rate mortgage is usually fully amortizing, meaning that your payments combine the principal and interest so that the full amount of the loan is paid off after a set amount of years. With a 15 year fixed rate mortgage, the loan is fully amortized, or paid off, after 15 years as long as no changes have been made to the terms of the loan.
Adjustable Rate Mortgage (3/1 ARM, 5/1 ARM, 7/1 ARM, 10/1 ARM)
A mortgage in which the interest rate is adjusted periodically based on an index. A variable rate mortgage often has a lower initial interest rate than a fixed mortgage. With a variable rate mortgage, however, the initial rate changes after a period of time. Once that period is over, the interest rate of a variable rate mortgage rises or falls depending on an index. This usually occurs every year over the term of the loan, but it depends on the adjustment interval specific to your loan. With a variable rate mortgage, you run the risk that interest rates will go up, causing your mortgage payment to increase. The interest rate of a variable rate mortgage changes, or adjusts, based on an index. An index is a published interest rate based on the returns of investments such as U.S. Treasury securities. The rates for these investments change in response to market conditions, so an index tends to track to changes in U.S. or world interest rates.
Interest Only ARM
The borrower only pays the interest on the mortgage through monthly payments for a term that is fixed on an interest-only mortgage loan. The term is usually between 5 and 7 years. After the term is over, many refinance their homes, make a lump sum payment, or they begin paying off the principal of the loan. However, when paying the principal, payments significantly increase.
If the borrower decides to use the interest-only option each month during the interest-only period, the payment will not include payments toward the principal. The loan balance will actually remain unchanged unless the borrower pays extra.
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