MORTGAGES Fixed Rate Mortgages Adjustable Rate Mortgages (ARM) Interest Only Mortgages (I/O) Negative Amortization Mortgages (Option Arm)
 | Fixed & Adjustable Rate Mortgages
A fixed rate mortgage is just what it says. Fixed rate for a length of time. That length of time is typically 10, 15, 20, 25, 30, 40 & now 50 year fixed rate loans. The term of your mortgage, along with other pertinent factors, will regulate what your interest rate will be. Your fixed rate loan will be amortized over the period of time you would like to have; whether you are sticking around in your home for a while or you are an investor, fixed rate mortgages are the loans that provide the most security for the duration of the mortgage. AKA ARM's. The ARM loan is a beneficially loan for the savvy mortgage investor or even a first time home buyer. Typical ARM loans are 3/1, 5/1 or even 10/1. This means the loan is fixed for the first 3, 5 or 10 years. But amoritized over 20, 30 or even 40 years. So you can take advantage of lower rates for the time being and then play the mortgage market when your fixed portion of your loan is approaching change. These loans typically are lower in interest rate due the adjusting factor after the fixed time period is finished. We like to call them Fixed/Adjustable in the true fashion the mortgage.
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| I/O & NEG AM Mortgages
Interest Only mortgages are more like a semi-risk stock meaning that you are involving more risk into your loan. When you are paying interest only, eventhough your payment is fixed, you are not applying any of your payment towards the balance of the mortgage. This poses more of a risk than an ARM. You must apply an extra payment to attack any of the principal balance. Negative amortization loans, or the Option ARM, are very risky loans and should only be given to the specially qualified borrower. These loans have four payment options: 1. A fixed minimum payment 2. An interest only payment 3. 30 year fixed payment 4. 15 year fixed payments This loan is specifically for the savvy mortgage investor that can apply more than just a minimum payment to the principal balance of the loan. Please talk to a qualified mortgage broker before deciding to accept a loan of this stature. |
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