Mortgage Primer

Overview of typical mortgages available. This is not a definitive list, rather one to give you an idea of various options you have when financing a home.

Fixed rate mortgage (30,20,15,10 years)
Interest rate & payment remain the same for the life of the loan.
Plan to live in the home for more then 7 years; Want payment stability

1 year adjustable rate mortgage
Interest rate is adjusted once per year, so payments will also change each year of the loan.
Want to take advantage of the lowest possible interest rate.

Adjustable rate mortgage 10/1
Interest rate & monthly payment remain the same for 10 years.
Starting the 11th year, interest rate is adjusted yearly for the remainder of the loan
Plan to move within 10 years, but want some stability.

7/23 (2 step) or ’30 due in 7′ Mortgage
Interest rate & monthly payment remain the same for 7 years.
Conversion option: On the 8th year, interest rate adjusts to prevailing rates and remains there for the remainder of the loan.
Plan to move within 7 years, but want some stability if plans change and can tolerate one payment adjustment.

Adjustable rate mortgage 7/1
Rate & monthly payment remain the same for 7 years. Starting the 8th year, interest rate adjusts annually, therefore payment will change yearly.
Plan to move within 7 years and want stability of payments in the first years of the loan.

7 year Balloon Mortgage
Interest Rate and payment remain the same for 7 years.
At the end of 7 years the loan is due in full; Balloon payment.
Plan to move within 7 years and want stability of payments. If you stay more then 7 years you will have to refinance at prevailing interest rates.

5/25 (2 Step) or ’30 due in 5′ Mortgage
Interest rate & monthly payment remain the same for 5 years.
Conversion option: On the 6th year, interest rate adjusts to prevailing rates and remains there for the remainder of the loan Plan to move within 5 years, but want some stability if plans change and can tolerate one payment adjustment.

5/5 & 5/1 Adjustable rate mortgage. (Also available as a 3/3 & 3/1)
Interest rate & monthly payment remain the same for 5 years.
On the 6th year, interest rate adjusts every 5 years to prevailing rates for the 5/5 loan and every year for the 5/1 loan. Plan to move within 5 years, but want some stability if plans change and can tolerate some payment adjustments.

Would you like to talk to me about buying your own home?
Call me directly at 760.476.9560