Loan Options for purchasing a home
With a fixed-rate mortgage, the interest rate stays the same throughout the life of the loan which means your monthly principal and interest payments won’t change. The tradeoff for the security of knowing that your monthly payment won’t increase is that fixed-rate mortgages usually have a slightly higher interest rate than adjustable-rate mortgages.
Commonly referred to as ARMs, adjustable rate mortgages have initial fixed rate terms of either 3, 5, 7, or 10 years. After this term, your interest rate will adjust annually depending on current rates. Ask us about the 5/5 ARM.
This type of loan is offered by the Federal Housing Administration. Some of the benefits include a lower down payment and more flexible underwriting guidelines.
The federal government offers loan programs to qualifying service members commonly referred to as “VA loans”. These loans allow for 100% financing.
I want to build home equity faster and pay off my mortgage sooner
Think about refinancing with a shorter-term loan which generally has a lower interest rate. Your payments will be higher than with a longer-term loan, but in exchange you will pay substantially less interest and will build equity faster. This is a great option for people whose goal is to build equity and pay off their home sooner.
I want to lower my interest rate and monthly payments
Your best option might be a longer term fixed-rate loan. This is especially a good idea if you don't think you'll be moving within the next five to seven years. If you do see yourself moving within the next few years, an ARM might be the best way to lower your monthly payment.
I want to refinance to cash out some home equity
Maybe you want to build your dream kitchen, pay your daughter's tuition bill or backpack Europe. If cash on hand will help, think about qualifying for a loan that's for more than the balance remaining on your current mortgage.