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What is the best mortgage loan for me?

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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.

Fixed Rates vs. Adjustable Rates

Fixed Rate Mortgage

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:

  • Since your monthly principal and interest payments stay the same regardless of interest rate changes, you know what to expect
  • Your initial monthly payments may be higher than an adjustable-rate mortgage

Adjustable 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:

  • Your initial interest rate and monthly payments may be lower than a fixed-rate mortgage
  • In the future you may have lower interest payments if the interest rate drops over time, or higher interest payments if the interest rate rises

How do you decide?

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.

30-Year Loan Term vs. 15-Year Loan Term

A loan "term" is how many years it will take to pay off your mortgage.

30-Year Term

Points to consider with a 30-year term:

  • Your monthly payments will be lower than with a shorter term

  • You may have a somewhat higher interest rate
  • You'll pay more interest over time

15-Year Term

Points to consider with a 15-year term:

  • Your monthly payments will be higher than with a longer term
  • Your interest rate is usually lower
  • You will be building your home equity faster

How do you decide?

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.