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Types of Loans
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- Fixed
Rate Loans—An excellent way to lock into a low interest rate for
the life of your loan.
- Adjustable
Rate Mortgages (ARM's)—The
flexible loan, with lower initial rates and payments.
- Initial
Fixed Rate Loan—Start
with a rate generally lower than standard fixed
rate loans.
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30 Year Fixed Rate
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Borrower Goals
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Loan Parameters
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Plan to live in the property over 10 years
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Like total payment stability
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Interest rate & monthly payment remain the same for 30
years
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15 Year Fixed Rate
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Borrower Goals
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Loan Parameters
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Plan on staying in property over 10-15 years
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Want to pay off property faster than 30 years
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Lower interest rate than 30 year loan
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Interest rate & monthly payment remain the same for 15
years
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10/1 Year semi-fixed
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Borrower Goals
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Loan Parameters
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Plan to live in property approximately 10 to 12 years
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Like initial payment stability, can accept interest rate
change later
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Interest rate & monthly payment fixed for the first 10
years
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Starting the 11th year, interest rate adjusted every year,
so payment is subject to change every year for remainder of loan
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7/23 (2-Step) or
'30/7 + 23'
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Borrower Goals
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Loan Parameters
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Plan to live in property approximately 7 to 8 years
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Can tolerate one payment adjustment
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Interest rate & monthly payment fixed for the first 7
years
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Conversion option: On the 8th year, interest rate adjusted
to reflect prevailing fixed interest rates, resulting payment will remain
the same for remainder of loan
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7/1 Year semi-fixed
rate
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Borrower Goals
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Loan Parameters
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Plan to live in property approximately 7 to 8 years
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Like initial payment stability, can accept change later
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Interest rate & monthly payment fixed for the first 7
years
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Starting the 8th year, interest rate adjusted every year, so
payment is subject to change every year for remainder of the loan
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5/25 (2-Step) or
'30/5 + 25'
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Borrower Goals
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Loan Parameters
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Plan to live in property approximately 5 to 6 years
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Can tolerate one payment adjustment
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Interest rate & monthly payment remain fixed for the
first 5 years
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Conversion option: On the 6th year, interest rate adjusted
to reflect prevailing fixed interest rates, resulting payment will remain
the same for remainder of loan
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5/5 & 5/1 Year
semi-fixed rate
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Borrower Goals
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Loan Parameters
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Plan to live in property approximately 5 to 6 years
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Like initial payment stability, can accept later changes
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Interest rate & monthly payment remain fixed for the
first 5 years
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Starting the 6th year, interest rate adjusted every 5
years(for 5/5 ARM) and every year (for 5/1 ARM)
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3/3 & 3/1 Year
semi-fixed
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Borrower Goals
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Loan Parameters
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Plan to live in property 3 years or less
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Like initial payment stability, can accept later changes
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Interest rate & monthly payment remain fixed for the
first 3 years
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Starting 4th year, interest rate adjusted every 3 years (for
3/3 ARM) and every year (for 3/1 ARM)
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Adjustable rate
loans
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Borrower Goals
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Loan Parameters
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Want to take advantage of lowest rate possible
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Are willing to accept yearly payment changes OR
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Cannot qualify at higher rate programs
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Interest rate adjusted every year, so monthly payment is
subject to change every year for entire 30 year loan term
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Potential higher payments (at maximum interest rate)
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