Programs

The traditional 30-year fixed-rate mortgage has a constant interest rate and monthly payments that never change. This may be a good choice if you plan to stay in your home for seven years or longer. If you plan to move within seven years, then adjustable-rate loans are usually cheaper. As a rule of thumb, it may be harder to qualify for fixed-rate loans than for adjustable-rate loans.  When interest rates are low, fixed-rate loans are generally not that much more expensive than adjustable-rate mortgages and may be a better deal in the long run because you can lock in the rate for the life of your loan.

This loan is fully amortized over a 15-year period and features constant monthly payments. It offers all the advantages of the 30-year loan, plus a lower interest rate—and you'll own your home twice as fast. The disadvantage is that,  with a 15-year loan, you commit to a higher monthly payment. Many borrowers opt for a 30-year fixed-rate loan and voluntarily make larger payments to pay off their loan in 15 years. This approach is often safer than committing to a  higher monthly payment since the difference in interest rates isn't that great.

This loan is fully amortized over a 15-year period and features constant monthly payments. It offers all the advantages of the 30-year loan, plus a lower interest rate—and you'll own your home twice as fast. The disadvantage is that,  with a 15-year loan, you commit to a higher monthly payment. Many borrowers opt for a 30-year fixed-rate loan and voluntarily make larger payments to pay off their loan in 15 years. This approach is often safer than committing to a  higher monthly payment since the difference in interest rates isn't that great.

The 2/1 Buy-Down Mortgage allows the borrower to qualify at below-market rates to borrow more. The initial starting interest rate increases by 1% at the end of the first year and adjusts again by another 1% at the end of the second year. It then remains at a fixed interest rate for the remainder of the loan term. Borrowers often refinance at the end of the second year to obtain the best long-term rates. However, keeping the loan in place even for three full years or more will keep their average interest rate in line with the original market conditions.

 An adjustable-rate mortgage, or ARM, is a mortgage with an interest rate that can be increased or decreased from time to time, depending on various factors. An ARM helps someone take out a mortgage during a period of low-interest rates, especially if the ARM has a relatively more extended fixed-rate period.