15 & 30-Year Fixed-Rate Mortgages
- Interest rate does not change
- Principal and interest (P & I) does not change
- Fixed-rate mortgages fully amortize over a defined period of time and are paid in-full at the end of the loan term
- Different loan terms are available (15- and 30-year terms are most popular)
- The shorter the term, the faster equity is built and the loan is paid off
Fixed-Rate with Temporary Buydown
- Borrowers or the seller may pay to temporarily “buy down,” or lower, the interest rate
- Decreased interest rate reduces the monthly payment
- Lower interest rate may help borrowers qualify more easily; qualifying factors may vary
- Interest rate/payment is typically reduced for 1, 2 or 3 years
Adjustable-Rate Mortgages (ARMs)
- There is potential for the interest rate/ payment to fluctuate
- ARMs transfer to borrowers a portion of the risk associated with a changing economy
- In exchange for sharing the risk, ARMs offer borrowers initial interest rates that are substantially lower than fixed-rate mortgages
- The lower interest rate may help borrowers qualify more easily; qualifying factors may vary
