A home purchase is one of the biggest financial commitments you can make, so it’s well worth the time and effort to contact Severino Financial today. Their experience and extensive knowledge will help get you the best rates & programs in the loan marketplace.
Home Loan Options
There are three basic types of mortgage loans: fixed-rate, adjustable-rate, and interest-only.
Fixed-rate loans offer a fixed interest rate throughout the life of the loan and are most commonly available with 15- and 30-year terms. Since your new home loan balance is amortized over the loan’s life, your payment stays stable.
Adjustable-rate mortgage loans are typically of shorter duration, with terms of one, three, five, or seven years. These loans also offer lower initial rates for that first chunk of time, after which it generally adjusts yearly within a two percent cap and can either increase or decrease according to market conditions. Unlike the stability offered by a fixed-rate loan, ARMs are best suited to those more comfortable with risk as you can’t predict whether your rate will go up or down.
Interest-only mortgages allow borrowers to make payments that cover just the loan’s interest, significantly lowering payments. However, this only lasts for a specific amount of time, after which your monthly mortgage payment will increase.