Not sure which loan is best for your situation? Here’s some information about loan types and term lengths to help you understand the differences.
A fixed rate mortgage applies the same interest rate toward monthly loan payments for the life of the loan. This gives you stable payments for the loan term, but usually higher monthly payments than an adjustable rate mortgage.
Points to consider with a fixed rate mortgage:
An adjustable rate mortgage does not apply the same interest rate toward monthly payments for the life of the loan. Your principal and interest payment will adjust periodically according to your mortgage contract based on changes in the interest rate.
Points to consider with an adjustable rate mortgage:
If you expect to be in your home a long time and it’s important that your mortgage payment remains the same every month, except for taxes and insurance, then you’ll want to consider fixed-rate loans.
If you’re interested in a lower payment to start out and comfortable with periodic changes to your mortgage interest rate, then you may want to consider adjustable-rate mortgages.
A loan "term" is how many years it will take to pay off your mortgage.
Points to consider with a 30-year term:
Your monthly payments will be lower than with a shorter term
Points to consider with a 15-year term:
If you can afford higher payments and want to build equity quickly, a 15-year term may work for you. If you want lower payments or want to qualify for a larger loan amount, a 30-year term may be a good choice.
If you have specific questions about loan types and terms, please contact us. Our mortgage specialists will be happy to help you.