Fixed Rate Home Loan Mortgage Programs

The typical fixed-rate home loan mortgage programs have a constant interest rate and monthly payments that never change. This may be the better choice if you plan to stay in your home for at least seven years. If you plan to move within seven years, then adjustable-rate loans are usually cheaper. As a rule, it may be harder for you to qualify for a fixed-rate loan than for an adjustable rate loan. When interest rates are low, fixed-rate loans are generally not that much more expensive than adjustable-rate mortgages and may be a better deal in the long run, because you can lock in the rate for fixed rate life of the loan. In addition, there are interest only and 40 year fixed options available from some lenders.

Thirty & Fifteen-Year Fixed Rate Mortgages
The fixed rate loan is fully amortized over 15 and 30 year periods and feature constant monthly payments. It offers all the advantages of the 30-year loan, plus a lower interest rate—and you’ll own your home twice as fast. The primary disadvantage with a 15-year loan is that you commit to a higher payment each month. Many borrowers opt for a 30-year fixed-rate home loan mortgage programs and voluntarily make larger payments that will pay off their loan in 15 years. This approach is often safer than committing to a higher monthly payment, since the difference in interest rates isn’t that great. You always have the option of paying your principal balance down by applying any overages towards the principal. This in turn will decrease your total interest over time.

Hybrid ARM (3/1 ARM, 5/1 ARM, 7/1 ARM)
These popular ARMS—also called 3/1, 5/1 or 7/1—can offer the best of both worlds: lower interest rates (like ARMs) and a fixed payment for a longer period of time than most adjustable rate loans. For example, a “5/1 loan” has a fixed monthly payment and interest for the first five years and then turns into a traditional adjustable-rate loan, based on then-current rates for the remaining 25 years. It’s a good choice for people who expect to move (or refinance) before or shortly after the adjustment occurs.

Adjustable Rate Mortgages (ARM)
When it comes to Adjustable Rate Mortgages ARMs there’s a basic rule to remember…the longer you ask the lender to charge you a specific rate, the more expensive the home loan mortgage will be.

2/1 Buy Down Mortgage
The 2/1 Buy-Down Mortgage allows the borrower to qualify at below market rates so they can borrow more. The initial starting interest rate for this kind of home loan mortgage program increases by 1% at the end of the first year and adjusts again by another 1% at the end of the second year. It then remains at a fixed interest rate for the remainder of the loan term. Borrowers often refinance at the end of the second year to obtain the best long-term rates. However, Consider keeping the loan in place for three full years or more to keep the average interest rate in line with the original market conditions.

Annual ARM
This loan has a rate that is recalculated once a year.

Monthly ARM
With this home loan mortgage program, the interest rate is recalculated every month. Compared to other options, the rate is usually lower on this ARM because the lender is only committing to a rate for a month at a time, so their vulnerability is significantly reduced.