Conventional loans that follow the terms and conditions established by the guidelines of Fannie Mae and Freddie Mac.
The interest rate and the principal payments remain fixed throughout the loan. Keep in mind your monthly escrow account payment could vary from year-to-year as taxes and insurance rates change.
Variable or Adjustable-Rate Mortgage
The interest rate on the loan fluctuates over the period of the loan. Periodic adjustments to the interest rate are made based on changes to a defined index. The loan's interest rate is determined by adding a fixed number of points to the defined index.
Short term, fixed-rate mortgage that has monthly payments usually based on a 30-year amortization schedule and a lump sum payment due at the end of term, usually 3, 5 or 7 years. The interest rate on balloon loans is usually less than a 15- or 30-year fixed-rate mortgage.
Conforming 30 Year Fixed
A 30 year fixed rate mortgage is the most common loan product today. A 30 year fixed mortgage offers not only the security of a fixed rate, but also the lowest monthly payment of the fixed rate mortgages. This type of loan makes the most sense if you are comfortable with the monthly payment and you plan to stay at your residence long term.
Conforming 15 Year Fixed
A 15 year fixed mortgage is probably the right loan for you if you are aggressively trying to pay off the balance of your home loan. These loans offer the security of a fixed rate, but have payments significantly higher than the 20 year fixed and 30 year fixed alternatives. Much like 20 year mortgages, you will be rewarded for opting for a shorter term as 15 year fixed rates are about .25% lower than 20 year fixed rates and about .50% lower than 30 year fixed rates.
Conforming 3/1 ARM
A 3/1 ARM product is an adjustable rate mortgage that has a fixed interest rate for the first 3 years, then adjust annually. The biggest benefit of a 3/1 ARM loan is that the interest rate is lower than just about every other type of mortgage loan available.
A 3/1 ARM may be a good choice for you if you think it is possible that you may move or refinance in the next three years. A 3/1 ARM is also very popular because the extremely low rate allows borrowers to maximize their cash flow to enjoy lower monthly payments and free up extra cash monthly to pay toward eliminating other monthly debts (i.e. credit cards, car payments, student loans, etc.).
A 3/1 ARM offers very substantial benefits with the low monthly payments associated with this type of loan. A borrower, however, must realize their is some risk in knowing that the rate on this type of loan can change after 3 years. We can help you determine if this type of loan is right for you.
Conforming 5/1 ARM
A 5/1 ARM product is an adjustable rate mortgage that has a fixed interest rate for the first 5 years, then adjust annually. The biggest benefits of a 5/1 ARM loan is that the interest rate is lower than most types of mortgage loans available and it offers a significantly longer fixed rate period than a 3/1 ARM.
A 5/1 ARM may be a good choice for you if you think it is possible that you may move or refinance in the next five years. A 5/1 ARM is also very popular because the extremely low rate allows borrowers to maximize their cash flow to enjoy lower monthly payments and free up extra cash monthly to pay toward eliminating other monthly debts (i.e. credit cards, car payments, student loans, etc.).