What are some of the different types of mortgage programs?
There are several types of adjustable rate and fixed rate mortgage loans. Here are
some of the more common loans:
30-year fixed rate mortgage
This is a conventional mortgage which provides for a fixed
interest rate and level payments for the 30-year life of the loan.
15-year fixed rate mortgage
The 15-year loan is a conventional mortgage in which the
borrower will pay fixed monthly payments for the life of the loan. With a 15-year loan, payments
are higher than a 30-year loan, but the loan is paid off much faster.
1, 3, 5, 7, 10 adjustable rate mortgages
These types of mortgage programs allow you to
carry a fixed interest rate for a specified amount of time. Once that time is up, you will
assume an adjustable rate for remaining life of the loan. For example, if you choose a 3 year
adjustable rate mortgage, you would have a fixed interest rate for the first three years of the
loan and an adjustable rate for the remaining years.
10/1, 7/1, 5/1, 3/1 treasury ARMs
These loans provide for a fixed interest rate for a
specified amount of time. After that you pay a variable interest rate with annual adjustments.
For example, if you selected a 10/1 Treasury ARM loan, you would have a fixed interest rate and
fixed monthly payments for the first 10 years of the loan. The remaining life of the loan would
assume a variable rate annually.
3-year, 1-year, 6-month treasury ARMs
This type of loan applies adjustments to the
interest rate payments in various ways. For example, if you selected the 6-month option, your
interest rate would adjust every six months. In comparison, if you selected the 3-year option,
your interest rate would adjust every 36 months.
Jumbo loan programs
These mortgages allow you to borrow more than an amount set by the
Federal National Mortgage Association. As of January 1, 1999 any loan over $240,000 is
considered a Jumbo Loan.
Conventional loan programs
Any loan that allows you to borrow within the amount set by
the Federal National Mortgage Association. Currently, loans under $240,000.