Fixed-Rate Mortgages
Features of Fixed-Rate Mortgages
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• Used for purchase or refinance, with terms of 10, 15, 20, 30 and 40 years.
• The interest rate and monthly payment remain the same for the term of the loan.
• This loan has no prepayment penalty.
• Loan can be used to buy a primary residence, second home or income property.
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• Monthly payments remain the same.
• Interest rates cannot rise due to market fluctuation.
• If planning to remain in your home for years to come.
Adjustable-Rate Mortgages
Features of Adjustable-Rate Mortgages
The interest rate adjustments are limited by periodic and lifetime rate adjustment caps.
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• Used for purchase or refinance, with terms of 15 and 30 years.
• Initial fixed interest rates for 6 months, 1 year, 3 years, 5 years, 7 years or even 10 years.
• Protects against unlimited interest rate increases.
• Some ARMs are assumable.
• Loan can be used buy a primary residence, second home or income property.
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• Your initial monthly payment is lower than a fixed-rate mortgage.
• With a lower monthly payment you be able to buy a larger home.
• You may not be planning to own this home for a long period of time.
• Interest rates may be headed in a downward trend the next few years.
The interest rate adjustments are limited by periodic and lifetime rate adjustment caps.
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• The rate caps limit how much your interest rate can go up or down.
• After the initial fixed-rate period, rates can adjust up or down annually based on the performance of a specified index. The rate is calculated by adding the index plus a margin. Margins are determined at the time you lock into an interest rate.
• The index is based on the ARM loan program and is based on US Treasure Bills, Indexes, Offering Rates, etc. as stated in the Wall Street Journal.
• Prior to the anniversary or end of the adjustment period the loan margin is added to the index to determine a new interest rate. Your monthly payment changes according to the new rate.
• In most cases your rate can go down or up a maximum of 2 percentage points annually at the end of the fixed rate period if you choose a 1 or 3 year ARM loan program.
• In some case your rate can go down or up a maximum of 5 percentage points at end of the fixed rate period if you choose a 5 or 7 year ARM loan program, then down or up a maximum of 2 percentage points annually.
• A lifetime interest rate cap is determined for all ARMs at the time you lock in your interest rate. This is the maximum rate you would ever have to pay.
THIS INFORMATION IS PROVIDED TO ASSIST ONLY AND DOES NOT CONSTITUTE AN OFFER TO EXTEND CONSUMER CREDIT. RATES AND TERMS ARE SUBJECT TO CHANGE WITHOUT NOTICE. THIS IS NOT AN ADVERTISEMENT TO EXTEND CONSUMER CREDIT AS DEFINED BY SECTION 226.2 REGULATION Z.